Distribution Rollover
If a client (over age 59 ½) takes multiple distributions from an IRA (within the last 60 days) and then wishes to rollover funds back to the IRA, as to not incur taxes on the multiple distributions, can the client rollover all distributions within the 60 days or can the client only rollover 1 of the distribution amounts back to the IRA within the days?
Example:
John Client has distributions of $25,000 on May 1 and $50,000 on May 15
Can John Client rollover $75,000 into the IRA to avoid income tax recognition on both distributions, assuming the rollover is within 60 days?
Can John Client only rollover an amount of $50,000 which is the largest distribution amount within the last 60 days?
Permalink Submitted by Alan Spross on Wed, 2008-06-25 22:50
Client can only roll one of those distributions either to a new IRA account or back to the original account. Since the 60 day period is still open on both of these distributions, it would be to his benefit to roll the larger amount of 50,000 back to the IRA.
The 12 month limitation applies to the distribution, not to the return of the funds. Therefore, if he had distributed the 75,000 at one time, then he could have returned this on two different days within the 60 day period.