Spousal Rolloveer
Husband and wife are both 68 years old. Husband has an IRA in a bank money market, and wife is sole beneficiary. Husband dies. Can wife withdraw money, deposit the check into her bank account, write a check to her IRA custodian within 60 days, and classify it as a rollover? Or does she need to first convert the IRA into her own IRA still at the bank, and then do a trustee-to-trustee transfer?
Thanks
Permalink Submitted by mk foss on Mon, 2012-03-05 18:12
It is always easiest if no checks are written in connection with a spousal rollover. The 60-day limit and once-per-year rules that apply to rollovers do not apply to transfers. She should tell the bank that she wants to roll the IRA to a benefiicary IRA, then she can transfer the beneficiary IRA to an IRA in her name with the custodian of her choice. The new custodian is generally pleased to arrange the custodian-to-custodian transfer once the new account is opened.
Permalink Submitted by Joe Messina on Mon, 2012-03-05 18:45
I agree that transfers are best. But is the first method correct too? If she takes a check payable to herself and deposits it. Then writes a check to the other custodian, is that technically still a rollover? I know the bank 1099-R will code it as a Normal Distribution, but when I do her tax return can I code it as being rolled over?
Permalink Submitted by Alan Spross on Mon, 2012-03-05 19:23
Yes, you can report it as a rollover, but make sure the 60 day deadline is met.
The rollover would be reported on lines 15a and 15b in the same manner as if she owned both IRAs all along. But since the new IRA has received a rollover, a 12 month waiting period applies to future rollovers from that IRA.
Permalink Submitted by Joe Messina on Mon, 2012-03-05 20:00
Excellent ! Thank you all for your time and your advice. It is greatly appreciated.