IRA rollover
Client has IRA’s in three different insurance companies and they have requested the checks from each (history of slow processing to transfer directly from all three). They plan to deposit all three checks and then write a check to a new company that will provide them with a Single Premium Immediate Annuity for 5 years with another company to begin monthly checks. Rather then trying to get a company to accept third party checks I want them to deposit and write their own check for the majority of the money received (they are keeping some for a current need). If this is all accomplished within 60 days will this qualify for an IRA rollover and only the monthly distributions will count as taxable income?
Permalink Submitted by Alan Spross on Tue, 2011-05-24 20:42
Yes, it will qualify providing there was no prior indirect rollover in the 12 months before the current distributions.
Client is allowed one rollover per 12 months per IRA account, so is allowed one for the distribution of each one of these existing IRAs. The new IRA annuities can be funded on different dates as long as they are all within 60 days from receiving the distributions. The new IRA annuity will have received rollover contributions and therefore no distribution from the new annuity can be rolled over for the next 12 months.
There are RMD considerations as well if client will reach 70.5 before the end of the 5 years.