IRA Distributions
I have a prospect who 2 weeks ago, got frustrated with their broker for the decrease in their portfolio and withdrew their IRA (he is younger than 59-1/2), withheld the taxes and deposited into his savings account where he wants to leave it.
Since, he’s already done the withholding and the taxes have already been “removed” – is he unable to redeposit into an IRA with me, and somehow replace the taxes withheld?
Permalink Submitted by Alan Spross on Thu, 2008-12-11 21:44
No, he can still complete as much of the rollover as he can fund, and if it is to be a full rollover, he will have to front the withheld amount to complete the rollover within 60 days from receipt of the funds. He can then recover any portion of the withholding in excess of his tax liability when he files his 2008 return. If he cannot front the withheld amount, then he will have a partial rollover. He should try to rollover as much as possible because any shortfall will be taxable income plus an early withdrawal penalty on the taxable amount.
That said, since only one rollover is permitted per account within a 12 month period, he needs to confirm that he had not done another rollover from that IRA in the prior 12 months.
Permalink Submitted by [email protected] on Thu, 2008-12-11 21:47
Thank you!