Distribution Rollover?
I have a client who recently retired from teaching-he’s 62. He had an annuity with TIAA Cref there, inside a 403b and a 401A. Part of the retirement package he took was taking a 10 year payout from the 403 and the 401A, in which he receives a yearly check/distribution of $32k. TIAA Cref said he can take this distribution and roll it over to an IRA. I want to make sure this is correct. I know IRA to IRA indirect rollovers are subject to the once per year rule. I also know from your book that plan to IRAs are not subject this- not that it should be an issue with a yearly check. But I want to make sure that this practice will be ok, taking the 403/401A distribution and rolling it into an IRA. (I also assume this needs to be done within 60 days).
Thanks for clarifying or correcting me, which ever it is.
Permalink Submitted by Alan - IRA critic on Wed, 2018-08-29 20:52
The key here lies in the definition of an eligible rollover distribution (ERD). The definition excludes substantially equal payouts over a period of 10 years of more. The 10 year payout here is actually completed in less than 10 years and therefore qualifies as an ERD. You are also correct that the one rollover per 12 month period limit only applies to IRA to IRA rollovers, and therefore does not apply to distributions from these plans.
Permalink Submitted by Tony Paper on Thu, 2018-08-30 15:13
So to confirm we can do this strategy of taking the distribution and rolling it into the IRA? (he would deposit the check to him from TIAA and then write a check to the new custodian for the identical amount?)
Permalink Submitted by Mary Louise on Thu, 2018-08-30 16:44
Hi I was wondering if anyone knew for a second marriage if an IRA is part of a QTIP and the one spouse is not 70 1/2 and passes, what would be considered income. In addition, if the spouse is 70 1/2 and passes, then what would be considered income? What if cash is part of the QTIIP, how would income be calculated? Any information would be appreciated. Thank you.