IRA Rollover
can an individual do 60 day rollover as follows…
1. use personal funds for new investment before IRA rollover monies arrive, and are deposited into personal account, then
2. deposit IRA rollover funds into personal account
its the reverse of most transactions
Thank You
Permalink Submitted by Alan Spross on Thu, 2010-09-30 18:14
Not sure if I follow your scenario.
If the investment is in an IRA, any non rollover funds you deposit must be eligible new contributions or they are an excess contribution that must be corrected. Are you planning to report your contribution as a regular contribution or a rollover?
If you report them as a regular contribution, the amount cannot be more than 5,000 or 6,000 if you are 50. If this is an excess contribution, you would have to correct it by the extended due date.
If you report it as a rollover contribution before you actually receive the rollover funds, and the IRS finds out about it, they would either make you correct it as an excess regular contribution OR worse case scenario consider it a sham transaction. I have not heard of anyone trying this before, so no telling how it would turn out.
Does not seem likely that there are any guarantees of enough profit from the investment to take this risk unless you qualify for a new contribution and then there would be no risk. You would just make a new contribution and purchase the IRA investment and if you could not afford a new contribution, you would keep that portion of the rollover money when you got it and only roll over the difference. The distribution would be taxable and subject to penalty, but the new contribution might be deductible.