IRA 60 Day Distribution

[akersch]

Hello from Oklahoma,

I recently took a 60 day rollover from my IRA and have distributed the funds back into the account within the proper timeframe. Currently, it is the only retirement account I have. I know I am not allowed to take another distribution from this account for 12 months from the time I received the funds.

Now, if I transfer the funds via Trustee-Trustee into another eligible retirement account with a different brokerage (to my understanding this would not be considered a distribution), would this new IRA be eligible for a 60 day distribution since I did not roll the money in or out of it. I know you can make as many transfers from IRA account to another, and only can take one distribution per 12 months per account.

Since the new account would not be tainted, I assume I can take a tax free 60 day distribution. Is this correct?

I appreciate any information provided.

 

[davew128]

Hello from Oklahoma,

I recently took a 60 day rollover from my IRA and have distributed the funds back into the account within the proper timeframe. Currently, it is the only retirement account I have. I know I am not allowed to take another distribution from this account for 12 months from the time I received the funds.

Now, if I transfer the funds via Trustee-Trustee into another eligible retirement account with a different brokerage (to my understanding this would not be considered a distribution), would this new IRA be eligible for a 60 day distribution since I did not roll the money in or out of it. I know you can make as many transfers from IRA account to another, and only can take one distribution per 12 months per account.

Since the new account would not be tainted, I assume I can take a tax free 60 day distribution. Is this correct?

I appreciate any information provided.

You already have your answer. One 60 day rollover per 12 month period. PERIOD.

 

[akersch]

You already have your answer. One 60 day rollover per 12 month period. PERIOD.

Even though it is a different account and you are allowed one 60 day rollover per account?

 

[tranquility]

Even though it is a different account and you are allowed one 60 day rollover per account?

Code section 408(d)(3)(B):

(B) Limitation
This paragraph does not apply to any
amount described in subparagraph (A)(i) re-
ceived by an individual from an individual
retirement account or individual retirement
annuity if at any time during the 1-year pe-
riod ending on the day of such receipt such
individual received any other amount de-
scribed in that subparagraph from an indi-
vidual retirement account or an individual
retirement annuity which was not includible
in his gross income because of the applica-
tion of this paragraph.

As dave128 said, one 60 day rollover.

 

[davew128]

Reminds me of a situation I was asked to review a few years ago. Someone prepared a return and had me review it for an elderly woman. It had a whole bunch of 1099-Rs with similar amounts but from different banks. I looked it over and the docs and said it looked it right. Guy says theres no way this woman had $100k of IRA distributions during the year, despite what the 1099s said.

Went back and looked at more documents and found bank statements showing CD maturities in the amount of the 1099s. WELL as it turned out, what the lady was doing was investing her IRA in 90 day CDs at whichever local bank had the highest rate and when the CD matured she would take the money and move it to the next bank which had the highest rate at that time. Problem is, she was TAKING THE MONEY. This is a problem with 1) investing through banks and 2) investing retirement accounts in CDs. She clearly didn't have the total amount of 1099s as income, but the truth is, she didn't have it all as a tax free rollover either as she did FOUR rollovers during the year. Not transfers, ROLLOVERS.

I don't remember the ultimate resolution but my take was that there was income after the second rollover for the amount of the rollover and the difference between that amount and the fourth rollover was interest income, and that money was supposed to stay out of an IRA from then on else the account would be both disqualified and an excess contribution penalty would accrue.