one 60 day ira r/o per year
using example to illustrate question about one 60 day ira r/o per 365m days in situation where time will not permit direct transfer: if withdraw 500,000 from ira 1 at one custodian, and endorse check over to ONE new ira custodian with LOI to divide the 500,000 and put 200,000 into ira2 and 300,000 into ira3 at the new single cutodian, am I in compliance with one 60 day r/o per year.
As I read opinion, the one time r/o applies to the withdrawal event only, but not to the number of ira’s the r/o funds are rolled into. However; I am unable to find any specific guidance as to whether the funds must be rolled into a new SINGLE ira or could it go into multiple new ira’s.
Thanks for any guidance you can give. John Turner
Permalink Submitted by Alan - IRA critic on Wed, 2016-06-29 21:10
You are correct. The time limit and the one rollover limit are both based on the distribution, not on the contribution date or number of contributions. Therefore, a single distribution can be rolled over to as many different IRA accounts as desired. Conversely, if you receive distributions on different days, these are 2 distributions and cannot be combined into a single contribution. Only one of these distributions can be rolled over.
Permalink Submitted by Toby Hartley on Mon, 2016-07-11 16:11
To piggy back on this. If you rollover to a bank account because the current custodian (401k 1) will not divide the funds. You then take the amount received and write two checks to IRA 1 and IRA 2, both at separate custodians. Is that one rollover because it came from one source?
Permalink Submitted by Alan - IRA critic on Mon, 2016-07-11 16:35
It would be one rollover if it mattered. But there is no one rollover limit for a distribution from a qualified plan in the first place. The one rollover per 12 months only applies to IRA to IRA rollovers. I am assuming that the bank account here is a checking or savings account, not a retirement account.
Permalink Submitted by Robert Goldsmith on Mon, 2016-07-11 16:39
I have a client that had her funds in a TSP as a gov’t employee. TheTSP would not transfer funds into an annuity even after several attempts to get their (The TSP’s) paperwork accurate. The funds were eventually transferred into a newly created IRA at a bank to accept the funds. The client then wrote a check on that IRA account to place the funds into her originally desired annuity.My understanding is, that Because the original funds did NOT come from a prior IRA, and it was a direct transfer, does writing the check to an annuity violate the 365-day rollover-rollover rule. Am I correct? Thank you!
Permalink Submitted by Toby Hartley on Mon, 2016-07-11 16:44
They current custodian advised to have it go to an IRA account at her bank, she has yet to do this. However, now that you confirmed the rollover only ira to ira, would it make more sense to have it go to an IRA account at the bank and then submit direct transfer paperwork, or have it go to regular checking and simply write two checks?
Permalink Submitted by Alan - IRA critic on Mon, 2016-07-11 19:25
Toby, probably best choice is from 401k as a direct rollover to bank IRA as that will avoid 20% withholding, From the IRA the funds could be rolled over indirectly but that would use up the one IRA rollover permitted. Better to move the IRA money by direct transfer so that one rollover can be preserved. If the 401k money is distributed and placed in a checking account, there will be 20% withheld, and then a check could be written for an IRA rollover but the 20% would have to be made up from other funds. If you have that 20% available you could do this and the checks to the IRA would not be considered a rollover for the one rollover limit because it is still 401k money that is being rolled over.
Permalink Submitted by Alan - IRA critic on Mon, 2016-07-11 19:29
Financial fitness – you are correct. The TSP is not an IRA so a 60 day rollover from the IRA can be done because the TSP to IRA does not count as a rollover. But the IRA to IRA annuity check would use up the one rollover for the next 12 months. So as long as client did not have a prior 60 day rollover between IRAs in the prior 12 months, he is OK. But cannot do another indirect rollover for 12 more months.
Permalink Submitted by Scott Reid on Fri, 2017-03-24 14:59
Can a client take two distributions from two separate IRAs (IRA#1, IRA #2) and rollover the entire amount within 60 days of the first distribution using a single check into IRA #1?
Permalink Submitted by Alan - IRA critic on Fri, 2017-03-24 15:34
No, because that would be two different distributions being rolled over. But client could take one distribution and roll parts of it over at different times or could transfer IRA 1 into IRA 2 and then take a single distribution from IRA 2 to be rolled over.