IRA Indirect Rollover Limit Help

Submitted by dan stacy on Sun, 2017-06-11 00:04

I withdrew money from 3 different CD accounts that are under 1 IRA plan on the same day with intentions of rolling over into a self-directed IRA account within 60 days. Based on my interpretation of the 590-A rule :

Application of one rollover per year limitation.
“You can make only one rollover from an IRA to another (or the same) IRA in any 1-year period regardless of the number of IRAs you own. The limit will apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. However, trustee-to-trustee transfers between IRAs are not limited and rollovers from traditional IRAs to Roth IRAs (conversions) are not limited.”
Chapter 1 Traditional IRAs Page 23

1) My interpretation is I can do this and it will be declared as (1) indirect rollover since you may aggregate them (as long as I do it within 60 days into the self-directed IRA)
Am I correct in this assumption?

2) Am I then allowed to do a Trustee to Trustee transfer once I have the money in the self directed IRA or do I still have to wait a year?

Thank You



Submitted by Alan - IRA critic on Sun, 2017-06-11 03:06

  1. This will come down to whether these CDs are really just investments in a single IRA account or each CD is it’s own IRA account. Because these distributions were done on the same day, it will be viewed as a single distribution if there is only one 1099R issued. However, if there is more than one 1099R issued then it does not matter if the distributions were done on the same day. You might want to call the bank and ask them if there is going to be more than one 1099R issued in January. If so, that would be bad news and only one of these would be eligible for rollover.
  2. You can always do unlimited TtoT transfers at anytime. The challenge is with Q 1 and if all of this money was eligible for rollover or not.

Submitted by dan stacy on Sun, 2017-06-11 04:08

My monthly statements have shown 3 different CD account numbers, however, only (1) IRA plan number.  They have assured me that there will be only (1) 1099-r, possibly showing 3 differents CD account numbers as detail of the (1) distribution. I guess I am concerned about inaccurate information from this very large institution since it has happened before. With that being said, would the IRS accept a corrected 1099-r if the bank inadvertently sent (3) 1099-r to the IRS. In other words, would this be a rectifible situation if the bank made a mistake and I have already rolled the money over into another IRA risking overage penalties and taxes?

Submitted by Alan - IRA critic on Sun, 2017-06-11 17:59

  • If you get more than one 1099R in January, you will have plenty of time to take this up with the bank before the IRS even sees your tax return. But if this happens, you need to contact the bank immediately and push for a corrected single 1099R. There will be no problem if this is reported as you first indicated with each CD being an individual investment in an IRA. Of course, even if this is treated as a single IRA account you still can only make one distribution from that IRA that is rolled over within the 12 month period, and you indicated that was the case. With a single 1099R this will not even become an issue, and you can just report this as a normal non taxable rollover on line 15 of Form 1040.
  • Even if the bank refuses to correct their 1099R if they issue more than one, you may well still be OK as long as you have evidence from your statements that this is a single IRA account. If this happens, just make sure you have copies in the event the IRS contacts you about the rollover. The IRS is slow, so if there are multiple 1099R forms that are not corrected, you would not even hear from the IRS in most cases for over a year, if at all. Finally, if you get 3 1099R forms and they all show the same IRA account number, all you would need to do if the IRS asks is show them that there was only one distribution date and one IRA and I think you probably have the paperwork to establish that.

Submitted by dan stacy on Sun, 2017-06-11 18:34

Thank You Alan…This is a great available resource

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