IRA Rollover
I have a new client who back in March met with an individual who sold her on moving all of her IRA money to an Equity indexed annuity. She requested distributions paid directly to her from the IRAs on 3/25/09. She then rolled over the funds to the EIA IRA but then got cold feet and requested the funds back within the free look period. She recieved that check on 4/29/09 payable to her. She has not cashed the check. Is this check eligible to be rolled over to a new IRA? What are her options to retain the funds as IRA funds? Thanks
Permalink Submitted by Joseph Arsenault on Tue, 2009-06-09 18:43
I have always wondered about this myself.
My understanding is that if a client uses their 60-day rollover and deposits the money into an Individual Retirement Annuity, and then free looks the policy and has the check sent back to them, this is violation of the 1 60-day per 12 month rule and it is a deemed distribution on those funds. I have looked for PLRs that may have allowed for an exception here but have found nothing.
Hopefully someone else has more information on this. From a purely technical standpoint it is a deemed distribution because possession of the money was taken twice in a 12 month period..
Permalink Submitted by Alan Spross on Tue, 2009-06-09 19:44
No reason that the one rollover limit would not apply to this situation, as a rollover FROM the IRA that received a prior rollover is subject to the 12 month limitation. Another case where just one direct trustee transfer would have prevented this problem. She could return the check to the insurer after determining a new receiving custodian for the IRA funds and request a direct transfer, but probably not much chance of them honoring the request.