Two Rollovers in one year?
A client recently died, and the surviving spouse is going to roll the wife’s IRA into his own IRA (i.e. spousal rollover). In addition to that, can the surviving spouse withdraw money out of his [i]own[/i] IRA and then put money back in (within 60 days)? This is a rewording of a posting I had made a week ago, but I wanted to make it as easy to understand as possible…and hopefully, get a response from the talent on this board.
All answers and suggestions are much appreciated!
There is an investement inside the IRA that the client wants to get it out by swapping it with cash (by withdrawing the security and depositing cash back in).
Permalink Submitted by Alan Spross on Mon, 2008-03-03 23:54
The “swap” cannot be done under IRA rollover rules which require that the same property withdrawn must be rolled back in (see Pub 590, p 25). This means cash out followed by cash back or stock certs out and same stock certs back etc). If you want to eliminate an investment in an IRA, it must be sold in the IRA or distributed out in kind as a taxable transaction.
With respect to the spousal rollover and the one rollover rule, you are correct that the Regs are vague on this issue with inherited IRAs, but you can make it a moot point by simply designating the inherited IRA as that of the surviving spouse OR by doing a direct trustee transfer to the surviving spouse’s IRA account.
Permalink Submitted by Andrew Markham on Tue, 2008-03-04 17:34
You and I came to the same conclusion…unfortunately.
Thank you so much for your help.
This gem of a site has an amazing pool of talent.