Hello 

A client accidentally rolled over an inherited 401k into an inherited Ira indirectly. This is strictly forbidden for non-spousal beneficiaries, but it was processed by the custodian to be deposited into an inherited IRA

They then moved the funds to a different custodian with me and realized that they need to be taxed on that money that got paid out in 2022 because that rollover was not allowed.

I now need to get the money out of the inherited IRA without being taxed.

The IRS said it needs to be removed as an excess contribution to an IRA with the custodian, but The new custodian (my custodian)  said they refuse to code it as a removal of excess contribution because the contribution did not happen there and that it must be processed as a taxable distribution - the other custodian said they would not be able to fix anything if it was taken back

So they are going to be taxed on the distribution from the 401k in 2022. Can the client complete a substitute Form 1099-R” (Form 4852) to correct the code from the new custodian if we have them distribute,- need i it shows up correctly as a removal of excess contribution to the IRS ?

Is there another way to get this money out and avoid having the IRS come seeking more tax that is required because of the 1099 R?