What is the definition of a taxpayer (60 day rollover)?
Just for clarification I am assuming that a husband and wife are deemed to distinct taxpayers for 60 day IRA rollover purposes? Theoretically it still would be possible to extend a rollover to a little less than 120 days by taking money from the second spouses IRA to pay back the first 60 day rollover?
Permalink Submitted by Alan - IRA critic on Mon, 2015-03-16 20:21
Correct. Each spouse is allowed one indirect rollover per 12 month period.
Permalink Submitted by Jose Morales on Mon, 2015-03-16 20:48
It wouldn’t be an extension of the rollover to 120 days. Spouse A can rollover funds that they withdraw from their own IRA within 60 days of the distribution. Spouse B can rollover funds that they withdraw from their own IRA within 60 days of the distribution. If Spouse A withdraws amount “X” from their IRA, then less than 60 days later Spouse B withdraws amount “X” from their own separate IRA to repay Spouse A’s withdrawal, Spouse B would need to replace amount “X” themselves prior to 60 days from the distribution date. Spouse A could not withdraw amount “X” again to complete Spouse B’s rollover, as they would have already exhausted their allowable one rollover per 12 month period.
Permalink Submitted by Jimmy Rench on Mon, 2015-03-16 21:01
Yes. Understood. Poor choice of words on my part. A little less than 120 days could pass from pulling from Spouse A’s IRA account to paying back Spouse B’s 60 day rollover. However, the second situation you described could prove valuable in shifting a withdraw from one tax year to another. Unless I am missing something.
Permalink Submitted by Alan - IRA critic on Tue, 2015-03-17 00:34
The issue is whether the funds will be available to complete Spouse B’s rollover near the end of the 120 days. That would have to come from some other source of funds that was obviously not available a few months earlier. If the second IRA distribution came in a different calendar year that the first distribution, and if the second distribution ends up taxable because the rollover is not completed, then the taxable income will be in the second year rather than in the year of the first distribution. Of course, if Spouse B is able to complete the rollover of the second distribution, it will not be taxable but both spouse’s will not be able to do another rollover for 12 months after the first distribution.