60-day rollover
If an IRA owner takes multiple distributions, and within 60 days of the first distribution puts the sum total back, is that considered multiple rollovers and disallowed due to the one rollover per year rule? Example:
Distribution#1 6/1/2008 $10,000
Distribution#2 6/15/2008 $10,000
Distribution#3 7/1/2008 $20,000
Total Distributions = $40,000
If the IRA owner puts $40,000 back into the same IRA on 7/15/2008, will this be allowed as a 60-day rollover?
Permalink Submitted by Alan Spross on Fri, 2008-07-25 20:18
No, this would be a violation of the waiting period. Each distribution counts as a rollover even if multiple distributions are deposited to an IRA at the same time. The reverse situation would be allowed, ie a single distribution of 40,000 that is returned within 60 days but a portion on different days. The one year waiting period also begins on the date of distribution, not on the day the rollover is completed.
Back to your situation, since only one of those distributions can be rolled over within 60 days, the best choice would be to elect the larger one of 20,000 for the rollover, and the other two would be taxable distributions. One solution to this would be to convert the other two to a Roth IRA, if eligible, since a Roth conversion does not count against the 12 month waiting period. The distributions would be taxable in either event, but rolling the two to a Roth IRA would preserve the full amount as IRA assets.