Are two 60-day Rollovers in 12 months allowed by a married couple?
We have a client who did a 60-day rollover in the first quarter of 2014, taking a premature withdrawal and re-paying within 60 days.
Her spouse (husband) took a premature withdrawal 5/1/15 with the intention of paying it back within the 60-day period. It now seems he will not be able to pay back until July.
Could the individual who did the IRA rollover 2014 (wife) take a pre-mature distribution now to satisfy the rollover into the husband’s IRA? Or, because they’re Married Filing Jointly would this be looked upon as two rollovers in the same period?
Permalink Submitted by Alan - IRA critic on Mon, 2015-06-08 19:59
The rollover limits apply per person. Since more than 12 months have passed since the client’s last rollover, she could take another distribution and gift it to her husband to complete his rollover within the 60 day time limit. They will then have to come up with funds to complete her rollover, and then neither of them can do another rollover for 12 months. Whatever is causing this use of IRA funds, if it continues sooner or later they will be stuck with a taxable distribution and penalty.
Permalink Submitted by Jimmy Rench on Mon, 2015-06-08 20:22
Correct me if I am wrong, but the clock starts ticking from the time of the first distribution, not the repayment (rollover) of that amount. If a person made a distribution on 5/31/2014 and returned the money on 7/15/2014, the 12 month clock would start on 5/31 not 7/15. This would allow the individual to perform another rollover on 6/1/2015.
Permalink Submitted by Alan - IRA critic on Mon, 2015-06-08 20:34
You are correct. My statement should have said “IF more than 12 months have passed since the distribution date of the prior rollover….”