60 day rollover out of simple IRA
Hello,
could I do a distribution out of simple IRA and then within 60 days put the money back? I thought may be not since any deposit into a simple IRA can either be salary deferal or employer contribution. help.
Hello,
could I do a distribution out of simple IRA and then within 60 days put the money back? I thought may be not since any deposit into a simple IRA can either be salary deferal or employer contribution. help.
Permalink Submitted by Alan Spross on Thu, 2011-05-12 22:37
Yes, you can do a 60 day rollover out of a SIMPLE IRA and back in. You can also roll a SIMPLE IRA balance into another SIMPLE IRA without waiting for the 2 year period to end as you would have do if the rollover went into a different kind of plan.
Permalink Submitted by Shahpar Naghshineh on Thu, 2011-05-12 22:45
Thank you for always replying timely. I appreciate your customer service.
Permalink Submitted by Alan Spross on Fri, 2011-05-13 01:09
Sorry, I gave you a bum steer. It didn’t sound right after I thought about it.
If the employee takes a distribution, it can be rolled over into ANOTHER SIMPLE IRA account, but not back to the same SIMPLE IRA. These plans were designed to reduce administrative expenses and this restriction is one of the ways to keep costs down.
Permalink Submitted by Shahpar Naghshineh on Fri, 2011-05-13 15:39
I see . but how does IRS notices that it was not put back into the same simple IRA or that it was put in the same simple IRA?
Permalink Submitted by Alan Spross on Fri, 2011-05-13 17:02
The SIMPLE account that makes the distribution issues a 1099R showing the account number. The SIMPLE receiving a rollover contribution issues a 5498 showing the rollover contribution. But the IRA trustee for a SIMPLE probably is aware that they can only accept a rollover from another SIMPLE IRA, and since they issued the distribution in the last 60 days, they would probably recognize that the rollover was coming from their own distribution and not accept it. If it got through anyhow, then the IRS would (or should) catch it by matching the 1099R account number to the 5498 account number.