Once Per Year Rollover
Hello-
I was wondering for clarity purposes, if I have a client that takes a distribution from her IRA with the intent on rolling it back within the 60 day window, if a few days later she takes a little more out because the purchase she is making was more than what she originally took out.
For ex: She took out $1400 on 2/15/18 but the purchase ended up being $1475. Is she able to take out that extra $75 on 3/1/18 and consider that a part of the first rollover, then put the entire $1475 back in the IRA within the 60 day window that started when she received the first $1400?
Thank You!
Permalink Submitted by Alan - IRA critic on Mon, 2018-03-12 15:42
No. The one rollover rule is based on the distribution and only one distribution can be rolled back. Since client has not rolled back either distribution yet, they can choose the highest of the two even if the highest had been the second distribution. In this example, the 75 distribution would likely be the one not rolled back. However, the one rollover limit does not apply to conversions, so client could still convert the 75 to a Roth IRA. Of course, the 75 would still be taxed in such a conversion but would not be subject to the 10% penalty as well, but the money would still be in an IRA, this time a Roth IRA.