72T and 60 Day Rollovers
Hello:
My father has two IRA’s. IRA #1 has 72T distributions set up and IRA #2 does not. He wanted to tap into IRA #2 for $40,000 but mistakenly took it from IRA #1.
Is he able to utilize the 60 day rollover option to put the $40,000 back into IRA #1?
Permalink Submitted by Alan Spross on Tue, 2012-05-01 20:03
Yes, provided that he has not used up his one rollover per 12 month period from that account.
For Acct #1 the line 15a amount on Form 1040 should be the annual distribution plus 40k and the line 15b amount must be the annual 72t distribution with “rollover” shown next to 15b. The account #2 distribution should also be shown on 15a and 15b and that one will be subject to the penalty unless he qualifies for a different exception for the account #2 distribution.
In no event can a rollover take place between the two accounts or it would bust the 72t plan.
Further, he will now have used his one permitted rollover for Account #1 meaning that he must be very careful in taking the exact correct amount from this account. If he takes out too much in error he will not have the flexibility to roll it back for the next 12 months.