60 day rollover with spouses
I have a husband and wife who both have IRAs at our firm. The husband turns 59.5 in June, but needs to pull out $150,000 now (exception does not apply). What we’re thinking about doing is taking out $150,000 from the husband’s IRA now, then taking $150,000 from the wife’s IRA in 50 days and paying his back. Then, once the husband is 59.5, we would take another withdrawal of $150,000 to pay back the wife’s IRA. They have done no rollovers in the past 18 months. Is this doable if we’re trying to avoid paying the 10% penalty?
Thank you!
Permalink Submitted by Alan - IRA critic on Mon, 2019-03-18 23:06
With no distributions rolled over for either spouse in the prior 12 months, these two rollovers could be done as long as each distribution is rolled back within 60 days. The final distribution not being rolled over will apparently occur after husband is 59.5, and there is no penalty on that distribution, just ordinary income tax. Each spouse will have then exhausted their one rollover for the next 12 months, leaving both with no emergency rollover for that time. They need to be very careful to meet all deadlines since the IRS is not sympathetic with IRA funds being used for loans and they will likely not grant any 60 day rollover relief if that deadline is missed.