One-time 60-day Rollover Rule
In an effort to prevent an IRA rollover nightmare, I was looking for some clarification pertaining to the 60-day rollover rule. The scenario is as follows.
Client has an ESOP with highly appreciated company stock and also has a 401K plan. The plan is to rollover the entire 401k into an IRA as well as a portion of the lumpsum proceeds from the ESOP in order to take advantage of NUA of company stock.
The ESOP has already issued the stock certificates for the portion of Company shares the client wants to keep in his name as well as a cash lumpsum which we rolled over into the client’s IRA within 60 days.
The 401K now says they have to issue him a check because they can not do a direct transfer. My question is:
If the check is issued to the receiving custodian FBO the client’s IRA would this violate the 60 day rule because the client is receiving a check for the second time in one year from the existing 401k?
As always your insight an input is greatly appreciated.
Permalink Submitted by Alan - IRA critic on Thu, 2017-02-23 19:59
No, the one rollover per 12 month limit only applies to IRA to IRA rollovers. As long as a 401k plan is either on the issuing or receiving end of the transfer, the one rollover limit does not apply. So even if the client changes their mind about NUA within 60 days of receiving the share distribution and decides to roll the shares over to the IRA, it still does not count against the one rollover limit.