60-Day Rollovers and Multiple Checks

Submitted by Edgar Brick on Thu, 2019-07-25 19:44

My client requested a $200,000 distribution from his IRA on May 31 with the intention of replacing the funds within the 60-day rollover period. Our broker split the contribution amount into two checks of $100,000 citing money laundering regulations.

Beverly DeVeny advised in a 2017 article regarding this subject online that “if an individual receives more then one check from the same IRA on the same day, then all distributions can be rolled over during the 60-day rollover period. She further stated that “if both checks are issued on the same day, both checks would be eligible for a 60-day rollover as long as no other 60-day rollover has been done in the past 12 months.” This is the case as this distribution was the first in a 12-month period.

My broker is insisting that it will recognize only one of the $100,000 checks under the 60-day rollover rule.

Are you able to cite the legislative code or section number or regulation which would permit the return of my client’s $200,000 distribution to his IRA within the 60-day period as set out above so that I can advise my broker accordingly?



Submitted by Alan - IRA critic on Thu, 2019-07-25 21:37

  • Beverly’s article does state that and it is logical, however I have not been able to pin down the IRS guidance that clarifies this. Since the rollover time limit is almost up, perhaps client should simply open a new IRA with another custodian to accept the rollover contribution. That eliminates the custodian blockage, and there is  unlikely to be any issues with the IRS because there will be only one 1099R for the 200k, not for each check.
  • Probably less attractive options include rolling over to an accepting employer plan, but there is not enough time for that without also doing a self certification to extend the 60 days deadline as well. Another would be to convert the 100k to a Roth, but that would generate the same tax bill except for any 10% penalty.
  • Does this broker have access to specifics, or are they just erring to the conservative side?

Submitted by Alan - IRA critic on Fri, 2019-07-26 00:04

Again, this is only anecdotal, but Natalie Choate published the following paragraph:

Multiple distributions considered one distribution? The limits of this potential exception are not clearly defined, but it does appear that if you ask your IRA provider to distribute your entire account, and the IRA provider (instead of giving you one big check) sends you the money in a few separate installments (maybe sending you the cash right away, and securities sales proceeds a little later), you should be able to consider that a single distribution. The IRS has appeared to apply this concept in at least one private letter ruling.

Add new comment

Log in or register to post comments