using 60 day rule
How would this situation work.
Client is 76 and wants to take out $26,000 now from his IRA (he already satisfied his RMD in January) and then put it back within 60 days to avoid taxation. He would not put the money back until 2019, so I am a little confused on the fact that he will get a 1099 for 2018 showing this distribution. Does he just not count it as a taxable distribution since he intends to put the money back in? I am thinking this has to be done in the same calendar year. Is that correct?
Thank you
Permalink Submitted by Alan - IRA critic on Fri, 2018-11-02 15:45
No. He has 60 days to return the funds or roll over to another IRA. He will report the 1099R as issued and enter “rollover” next to the taxable income line as long as he makes the rollover contribution within 60 days, regardless of which year. HIs taxable income for IRA distributions will then be limited to his RMD. While the Form 5498 reporting the rollover contribution will be for 2019, the IRS is used to seeing some distributions done late in the year not being rolled back until the following year. Finally, client can only do this one time over a 12 month running period, so first he must be sure that he did not do another 60 day rollover in the prior 12 months. And if he is clear to do this rollover, he cannot do this again for another 12 months.