IRA distributions
when replacing an ira distribution within 60 days, can you use a distribution of cash from a second ira and then replace the distribution from the second ira within 60 days of that second distribution?
when replacing an ira distribution within 60 days, can you use a distribution of cash from a second ira and then replace the distribution from the second ira within 60 days of that second distribution?
Permalink Submitted by Alan - IRA critic on Thu, 2018-07-05 22:30
Not anymore. Starting 1/1/2015 the rules were changed from allowing one rollover per IRA account to one for all your IRAs in total over a 12 month period. Therefore, you could replace the first distribution from the second IRA, but then would not be able to roll over the second distribution. For awhile people could work around that by converting the second distribution and then recharacterizing it back to TIRA, but starting this year you cannot recharacterize a conversion either. But you could still return the second distribution by converting it to a Roth IRA. That would avoid the penalty on the second distribution and you would retain the money in an IRA, just a Roth IRA. Taxes would be due on the conversion.
Permalink Submitted by Bruce Steiner on Fri, 2018-07-06 02:38
The rules didn’t change (except many years ago when they changed from three years to one year). It was in the Internal Revenue Code all along. I don’t know why the IRS didn’t realize that.