two rollovers in same year
client has two qualified plans, one a profit sharing plan and one as a 408b. She wants both combined into an IRA.
If we have both companies transfer the total assets into the IRA, does that count as two rollovers and she will be taxed on one of them?
or…
Since both transfers are being sent directly to the IRA, it doesn’t count towards the two rollover rule?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Tue, 2016-08-16 18:27
A 408(b) is an IRA annuity, so client has a qualified plan and an IRA now. Any direct or indirect rollover from the qualified plan to an IRA does not count against the one rollover limitation. However, an indirect rollover of the IRA annuity to a non annuity IRA account will count. If the client wants to avoid using up the one rollover and save that rollover for a later emergency, then they should do a direct trustee to trustee transfer to move the IRA annuity to the regular IRA account. It sounds like they are doing the transfers directly, no check will be made out to the client personally, and therefore client will not be charged with any rollover.
Permalink Submitted by Douglas Bauerband on Tue, 2016-08-16 20:35
You mentioned above that: “However, an indirect rollover of the IRA annuity to a non annuity IRA account will count”a. 408b annuity was transferred to a Managed bokerage IRA account. Went directly from 408b to managed trustee.b. Profit sharing plan annuity would be transferred the same way into the managed IRA account.The managed account is not an annuity, Just an IRA.Since the managed IRA account is not an annuity, this will go against the two rollover rule?thank you,Douglas
Permalink Submitted by Alan - IRA critic on Tue, 2016-08-16 23:30
The 408b moved by a direct transfer to the IRA, so it will not count. An indirect 60 day rollover would have counted, but the funds were not moved by indirect rollover. There should be no 1099R issued.
Permalink Submitted by Martin Helmer on Sun, 2016-08-21 15:29
Maybe original poster meant to reference a 403(b) ‘tax-sheltered annuity ‘ as one of the ‘qualified’ plans. Either way, you’re good to go; there’s no issue with the one rollover per year rule.