60 day rollover rules
Client takes a distribution from an IRA of $30,000 on 12/02/24 and then takes a distribution of $3,000 out from IRA on 12/009/24. Can he rollback the $30k within 60 days to avoid taxes for 2024 distribution taken on 12/02. Is there an ordering procedure in this case that would only allow client to rollover the last distribution of $3k within 60 days?
Thank you,
Paul Ciccarelli
Permalink Submitted by Alan - IRA critic on Mon, 2024-12-30 15:29
No ordering rules. As long as any distribution is within 60 days of the receipt date it can be rolled over, providing that another such 60 day rollover had not been done within the last 12 months of an earlier distribution.
The 30,000 distribution can be rolled back within 60 days of the distribution and extending into 2025. The other distribution is not eligible to be rolled back but could be converted to a Roth IRA (which would still be taxable) or rolled into an accepting employer (non IRA) plan, in which case tax on the 3000 could be avoided.
Permalink Submitted by BruceM on Mon, 2024-12-30 17:15
Hi Alan
A Question.
You said above “The other distribution is not eligible to be rolled back but could be converted to a Roth IRA ”
Is there a 60 day time limit between TIRA withdrawal and the Roth conversion? Or can the withdrawal be converted at any time after the TIRA withdrawal as long as its by 12/31 of that year?
Permalink Submitted by Alan - IRA critic on Mon, 2024-12-30 19:49
Bruce, because a distribution was made, a conversion or any other rollover must be completed within 60 days from the date the distribution was received, and it’s OK if the 60 days extends into the following year.
Rev Proc 2020-46 provides provisions that extend the 60 day period for specified reasons for failing to meet the 60 day deadline. The taxpayer files a self certification form with the IRA custodian in order to allow the custodian to accept a late rollover contribution.