IRA Rollover
Client withdrawas 206,000 from their IRA. They Rollover 203,000 to a new IRA after 25 days. Other then paying tax on the $3,000 they kept, have they violated any rules? Will this trigger an automatic AUDIT? They are only reporting the net $3,000 as taxable. Please advise.
Permalink Submitted by Jose Morales on Thu, 2012-03-01 16:44
As long as it was the only rollover of the same funds within the prior 12 months and did not include any portion of a required distribution, then there shouldn’t be any problem with this. The likelihood of this triggering an audit is very low, but you can never say that there is no chance of an audit. Rollovers happen all year long and many times the rollover amount is less than the distribution amount because the IRA owner chooses to keep some of the distribution for whatever reason.