60 day rollover rules
Question. 60 day rollover rule. As you cannot take a rollover from the same account within 12 months…does the 12 month period restart from the date you received the funds or from the date you repaid the funds? Please advise. Thanks.
Permalink Submitted by Alan Spross on Tue, 2010-08-03 22:05
Jeff,
It starts from the date you received the funds. Also note that the one year limitation also applies to distributions from the IRA account that received the first rollover.
For example, if you receive a distribution on 2/1 from IRA A and roll it to IRA B on 3/1, you cannot roll over another distribution from EITHER IRA A or IRA B that you received prior to 2/1 of the following year.
If you mess up, you can get some relief by opting to make the largest distribution the rollover that survives. For example, if you distribute 10,000 on 5/1 and roll it over but then take out another 20,000 on 10/1 that you also roll over, you can choose to protect the larger rollover of 20,000. You would do that by reporting the 10,000 as taxable income and removing it along with any earnings as an excess rollover contribution. Better to be taxed on 10,000 plus a small amount of earnings than on 20,000. You can also avoid these problems by doing direct transfers whenever possible, although the direct transfer will obviously not provide you with any temporary use of the funds.