60 day rollover
I have a client doing a real estate closing where they haven’t sold their house, but they are closing on their new house on Wednesday. I plan to send the funds from the client’s IRA to the title company and the client should sell their home before the 60 days are up, worst case they move funds from their brokerage account. Is it a problem if I send money from my client’s IRA to XYZ Title Company for the closing and then replenish the funds within 60 days? A colleague of mine is concerned the 60-day rollover won’t be allowed because I will be sending the proceeds to a different payee (meaning not the client). Is this going to be an issue if I send the funds directly to the title company or should I send it to his joint brokerage account first and then wire the funds? My understanding is the custodian will issue a 1099-R whether I wire funds to the title company or move it to a brokerage account and as long as I show proof it’s back within 60 days, I’m fine.
Permalink Submitted by Alan - IRA critic on Mon, 2024-11-18 15:02
You could make out the check to the title company, and the 1099R will be the same as if the check was sent to the client. That said, intending to meet the 60 day rollover deadline based on a real estate closing is very risky since any number of problems could delay that closing. These delays have resulted in many taxpayers ending up with tax and penalty on the distribution that did not get back in time.
Of course, you also need to be sure that the client did not distribute any other amount in the prior 12 months that was rolled over (only one 60 day rollover allowed in a 12 month period).