IRA cash distribution per year
I have a couple of managed ira’s. Can I take a cash distribution from each (not a transfer) and put them into a new IRA. It appears that I am limited to one
distribution per year not sure if that limit is per ira or just one per person? Cash distribution is much quicker than a transfer.
DAH
Permalink Submitted by Alan Spross on Fri, 2010-02-19 20:24
You are allowed one rollover per 12 month running period measured from the date of distribution. This limit is per IRA account and also includes the account that receives a rollover. Therefore, if you distribute funds from IRA A and roll them to IRA B, you cannot roll another distribution over for 12 months from EITHER A or B.
You must also report the rollover on your tax return on line 15 because you will receive a 1099R. Direct transfers are unlimited and you do NOT have to report them, which is why that is the preferred method to move funds. But when doing an indirect rollover as you plan, you must be sure to 3 things:
1) That the funds are deposited into a new or the same IRA account within 60 days, specified as a rollover contribution.
2) That you did not use up your one rollover within the prior 12 months
3) That you remember not to do another one within the next 12 months.
Permalink Submitted by Dennis Healey on Fri, 2010-02-19 20:57
Alan – Thanks. If I understand you correctly, I can not take a in-direct distribution from my two managed ira accounts into one new ira account since that would represents two distributions to that new IRA in the same 12mo. but, rather would have to take in-direct distribution into two new ira’s. (one to one) ?
Dennis
Permalink Submitted by Jose Morales on Fri, 2010-02-19 21:12
You do need to be careful when it comes to determining how an “account” is defined. You may have several investments at one financial institution, but they could all be held under one IRA “Plan” and not have seperate reporting. You would not be able to complete a distribution and rollover for each seperate product/investment within one 12 month period.
Permalink Submitted by Alan Spross on Fri, 2010-02-19 21:43
Dennis,
No, you COULD take a distribution from each account and roll them to a new account. After that you would have to wait 12 months to take another rollover distribution from ANY of the 3 accounts. The rollover limit is applied per distribution from each numbered IRA account, so the deposit of both distributions into the new IRA account is OK, it just limits future rollovers OUT OF that new account for the next 12 months.
Permalink Submitted by Dennis Healey on Sat, 2010-02-20 00:09
Alan, thanks again for the advice today and in the past. Dennis [quote=”[email protected]“]Dennis,
No, you COULD take a distribution from each account and roll them to a new account. After that you would have to wait 12 months to take another rollover distribution from ANY of the 3 accounts. The rollover limit is applied per distribution from each numbered IRA account, so the deposit of both distributions into the new IRA account is OK, it just limits future rollovers OUT OF that new account for the next 12 months.[/quote]