Withdraw from IRA or Multiple IRA’s with 60 day rollover rule

Submitted by Julie Brangenberg on Thu, 2019-01-03 20:25

Hello. Have a client who is 70 1/2. He wants to withdraw money from his IRA and hopefully put it back in 60 days. He has 3 IRA accounts with the same annuity carrier. Would it work with the 60 day rollover rule to draw from multiple IRA’s and put the money back in 60 days, or should he only withdraw from one and put the money back in 60 days? Thanks.



Submitted by Alan - IRA critic on Thu, 2019-01-03 21:04

The problem here is the one rollover limitation for ALL IRA accounts over a 12 month period as the IRS redefined it in 2015. The IRS specifically wanted to stop a series of IRA “loans” using multiple accounts. Another thing to consider is that the client must complete his RMD for the IRA he plans to withdraw from before any other distributions are taken because the first distribution in an RMD year is deemed to apply to the RMD and cannot be rolled over. Therefore, as long as he did not another rollover in the past 12 months, he could complete his RMD for the IRA he plans to take the additional distributions from, then take the additional distribution and roll it back within 60 days. Perhaps since he needs to take RMDs for all his IRA accounts, he might not need to withdraw additional amounts??

Submitted by Bruce Steiner on Thu, 2019-01-03 21:44

He could move all 3 into a single IRA in a trustee-to-trustee transfer.  He can then take out what he wants and put it back (except for his RMD, of course) within 60 days, and it would only count as one rollover.

Submitted by Julie Brangenberg on Mon, 2019-01-07 19:36

Thank You so much for the valuable information.  I don’t believe the RMD’s of all together will cover his short-term needs.  One Annuity IRA would be enough to cover his requirements.  The only problem is that he already used his Reinvestment Privilege with the Annuity IRA, so any money distributed would have to be reinvested as a contribution with a new surrendar schedule.  According to the Annuity Carrier, since the client is 70 1/2 no new contributions are allowed, except transfers from a qualified plan.  If he did take a distribution from his Annuity IRA, could he roll it over into a newly established IRA within 60 days, after the RMD is taken first, as you’ve stated.

Submitted by Alan - IRA critic on Mon, 2019-01-07 22:57

Good chance the current company requires each annuity be held in a separate IRA account, but were they asked if the 3 could be combined by direct transfer as bsteiner suggested without the transfer being considered a new contribution for annuity purposes?  This is definitely not a new contribution for IRA purposes and a transfer can be done irrespective of RMD considerations. If the 3 (or perhaps just 2 would be enough) can be combined by direct transfer, then there will be enough in the account to complete the 2019 RMD for all accounts and still enough for the distribution. The excess not needed could be rolled into another new IRA, it does not have to be rolled back into an annuity. Besides, an annuity IRA and a temporary loan do not appear to mix.

Submitted by Julie Brangenberg on Tue, 2019-01-08 20:37

Does the distribution have to come from one IRA before it’s allowed to be rolled into an IRA using the 60 day, once every 12 months rule?  Or Can multiple distributions be rolled back into one IRA using the 60 day rule?Should the annuity carrier allow the 60 day rollover rule contribution without counting it as an initial contribution, or should we go the route of opening a new IRA to roll the assets into within 60 days?

Submitted by Alan - IRA critic on Tue, 2019-01-08 23:12

  • Yes, because there can be only one distribution rolled over. So if client needs more money than one IRA holds, a direct transfer to combine it with another IRA account would produce a large enough balance to enable a single distribution that could be rolled back. While this is easy with a typical brokerage IRA account, it may be difficult of impossible with an IRA annuity due to insurer restrictions for their annuities.
  • Since the one rollover limitation per 12 months is measured by the number of distributions, NOT by the number of rollover contributions, it is not permissible to have more than one distribution rolled over, but it IS permissible to have a single distribution rolled over to multiple IRA accounts on different days and in different amounts.
  • It is up to the insurance carrier whether to count a transfer or rollover into an IRA annuity without treating it as a new contribution with respect to surrender periods, etc.  Of course, if the annuities were surrendered and then transferred into a single brokerage or mutual fund IRA account, then the desired single distribution could be made from that IRA and rolled back. However, there are still surrender charges to be paid to the insurance company for all 3 annuities.

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