Roth IRA 60 day rule multiple distributions
If someone has a Roth IRA and took a $20,000 distribution within the last 30 days and then decides to take another distribution today for $15,000 how does the 60 day rollover rule apply?
Can she put back $15k within 60 days and therefore subject the original $20k to normal full distribution rules? Or could she deposit $20k back into the Roth IRA within 60 days of the $20k withdrawal and then subject the $15k to normal full distribution rules? Does it matter which one?
Thank you
Permalink Submitted by Alan Spross on Tue, 2012-09-25 01:00
In this situation, there are two restrictions to consider:
1) The 60 day deadline to complete a rollover – this applies separately to each distribution
2) The one rollover rule for distributions from a given IRA account.
Since there is only one rollover allowed and the number of rollovers is determined by the number of distributions (and not by the number of rollovers), the taxpayer has a choice which distribution can be rolled back to the IRA or to another IRA. Either the 20k or the 15k cannot be rolled back and must be reported as a distribution on Form 8606. The taxpayer does have that choice.
Options would be broader if taxpayer had taken 35k out at one time. Then the entire amount or any portion thereof could be rolled over. The statement made above also assumes that there were no other distributions that were rolled over in the 12 months prior to the distribution date of the 20k. If one rollover of the current distributions is allowed, the taxpayer is also limited for the next 12 months as well.
Permalink Submitted by Tom Farrell on Tue, 2012-09-25 13:34
Thanks for your response. Depending on which distribution (the $20k or the $15k) she chooses to roll back into the Roth IRA, the 60 day clock starts basically on the date of each distinct withdrawal?
Permalink Submitted by Alan Spross on Tue, 2012-09-25 19:17
Yes, the 60 day clock starts on the date each inidividual withdrawal is RECEIVED, which is typically a couple days after the distribution is made.