60 Day Rollover to Roth IRA or Traditional IRA
401(k) account of approximately $20,000 was distributed in December 2018. Received $16,000 with $4,000 withheld for federal income taxes. Would like to do a 60 day rollover to an IRA or Roth IRA. Have additional funds to make up for the $4,000 withheld to rollover the full $20,000. Since this will be done over 2 tax years how are taxes handled? Is the rollover included for the 2018 taxes?
Permalink Submitted by Alan - IRA critic on Wed, 2019-01-30 21:12
Yes, you would report the distribution and rollover on your 2018 taxes and should receive a 1099R reporting the distribution. After supplying 4,000 from your other funds to make the rollover complete, you can roll the 20,000 in any combination to your TIRA and Roth IRA. Of course, any funds rolled to the Roth IRA will be taxable. For purposes of the 5 year holding period for the Roth rollover, it will begin in 2019 because the actual Roth contribution will be made in 2019 despite the fact that the rollover is reported on your 2018 return, and any taxes due are reported on your 2018 return. These rollover(s) do NOT count against the one rollover per 12 month limitation because the distributions were NOT from an IRA.