60 day rollover

Submitted by Robert Roselli on Wed, 2020-02-26 16:14

I have a gentleman who will be selling his 2nd house and getting the money around 03/15/2020. I know he can do a 60-day rollover for any IRA distributions he took out from 01/15/2020-03/15/2020. In his case, he’s taken 5 distributions.
Let’s assume they were all $ 10,000. He’s allowed one per year. Is he allowed do only do one or can he use his 60-day rollover for all IRA distributions taken over the 60 day period?



Submitted by Alan - IRA critic on Wed, 2020-02-26 17:36

  • He can only do one. He should have taken one large distribution since he can always roll the excess back, but if he takes several distributions he can only roll one back. The limit is measured by the number of distributions rolled over, not by the number of rollover contributions.
  • Since he will be stuck with taxable distributions plus penalty if under 59.5, he might want to consider rolling the other distributions to a Roth IRA because conversions do not count toward the limit. This will eliminate the penalty as long he does not withdraw from the Roth conversion money in the first 5 years. But a Roth IRA is worth more than a TIRA, so the Roth conversions would salvage some value for the taxes he will owe.

Submitted by Robert Roselli on Wed, 2020-02-26 17:45

I’d rather ask my questions in different postings. So he has had 5 IRA distribution over the last 60 days. You said he can only put back one. Can he pick the largest one or does it have to be the most recent one? He’s over 59.5.

Submitted by Alan - IRA critic on Wed, 2020-02-26 18:26

He can use his one rollover on any distribution done in the last 60 days he wishes. He should definitely choose the largest distribution if he does not need the money.

Submitted by Robert Roselli on Wed, 2020-02-26 18:31

That clears that up. for the other 4 distributions, he got the money and spent it. When he gets a lump sum from the sale of his house, did you say he can open up a Roth to receive the proceeds from the other 4 distributions? My client is 73 and I believe is fully retired. If he can do a Roth, will it make a difference if he’s working or not?

Submitted by Alan - IRA critic on Wed, 2020-02-26 18:50

  • If he comes up with the funds from any source, he can make a conversion contribution to a Roth IRA as long as the conversion is completed within 60 days of the distributions he wants to convert. However, real estate transactions are often subject to delays, and if he does not get the sales proceeds so enough, some of those distributions might have exceeded 60 days. 
  • Client is subject to RMDs and the first distributions in any year are deemed to apply to the RMD. Since he spent some of the money, his 2020 RMD might be complete. However, if it is not complete he cannot do a conversion until the RMD has already been satisfied. This should be investigated before doing any conversions.

Submitted by Robert Roselli on Wed, 2020-02-26 19:16

These 5 he took out since 01/15/2020 are in addition to the distribution that satisfied his RMD. I will pay attention to the date he actually gets the proceeds and eliminate any distribution that has exceeded 60 days. Assuming he has the money and the distribution hasn’t hit 60 days. I convert it to a Roth. It’s taxable, but at least he has the money growing, in this case, a tax-free account. Is everything I said correct?

Submitted by Alan - IRA critic on Wed, 2020-02-26 20:30

Yes, that is correct.

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