Question on 60-day rollover scenario
Individual wants to do a 60-day rollover from one custodian to another. He receives the entire check, then rolls it over.. While still within the 60 days, he receives 2 more checks on dividends that were issues to the account. It is my understanding that these are separate distributions, thus only one check may be rolled over per the 12-month rule. Does anyone know of anything different in this scenario? Can multiple distributions be aggregated if they are all re-deposited within 60 days from receiving the first check?
A similar scenario would be an individual taking 20k out of their IRA, a week later taking another 20k out, and then 2 weeks later redepositing the entire 40k in a new IRA because both withdrawals were re-deposited within 60 days of the earliest.
-J
Permalink Submitted by Anonymous (not verified) on Tue, 2009-06-23 18:31
It is my firm understanding that the 60-day rollover rules apply to the distribtution end. This means that you [u]cannot[/u] rollover different distributions within the 365 day rolling period, even if done 60 days from the first one. On the other hand, one distribution of 20K, for example, can be rolled over in any incremental amounts, as long as it is completed during the 60-day period.
In your specific situation, are the trade dates all the same, just different checks? This could be an argument for looking at this as one distribution. For example, if you completed a rollover from several mutual funds and asked your custodian to sell three funds, all three will likely come in separate checks. I cannot imagine the IRS would argue these would be separate rollovers (to be 100% safe, one should probably first combine into one fund).
Pub 590 will contain “somewhat” clear language as to rules in my paragraph one.