One 60-day rollover per year

Submitted by Bill Briner on Mon, 2020-03-16 02:25

I have 9 different 72-month Roth IRA certificates of deposit and 4 different 72-month IRA certificates of deposit at my credit union totaling more than both the $250,000 NCUA insurance as well as their additional $250,000 Excess Share Insurance coverage. These certificates all have more than 4 years remaining until maturity and most of them are paying between 3.0% and 3.75% interest. Even though this is the largest credit union in Missouri and it’s latest Bankrate rating is 4 stars out of a possible 5 stars, with the current medical and financial crisis, I’m concerned that both the credit union and the private insurance company that is insuring my deposits between $250,000 and $500,000 may run into financial problems, putting over $250,000 of the money in these IRAs at risk.

I would hate to give up these great rates, but I may decide to rollover and/or trustee-to-trustee transfer some of these funds to another financial institution at a lower interest rate because of my concerns about the credit union’s and the private insurer’s financial safety in order to get my total down to either $500,000 or $250,000. If I have the credit union make internal transfers from IRA certificates to an IRA savings account and from Roth IRA certificates to a Roth IRA savings account, would moving money from both the IRA and Roth IRA savings accounts at the same time to another financial institution qualify as a single 60-day rollover, or must the one 60-day rollover per year be either an IRA or a Roth IRA, but not both? Thanks.



Submitted by Alan - IRA critic on Mon, 2020-03-16 04:44

  • You can only do one rollover in total over a 12 month period for all your IRAs combined. With as many accounts as you have and dealing with large amounts, you should only move money by direct non reportable trustee to trustee transfers. Save your one permitted rollover to bail you out of errors or for unanticipated emergencies.  
  • If you request a transfer, be very clear that there is to be NO distribution or 1099R. You might start with  Roth IRAs which are worth more than TIRAs, being all post tax. In the event of an error you will have your one rollover available to use. Once you get the Roths transferred OK, then move the TIRAs. The disaster only occurs when the second distribution takes place and you no longer have a rollover left. If a second account is distributed to you and it is a TIRA, you can convert that one to a Roth IRA since a Roth conversion does not count toward the one rollover rule. That’s better than a distribution because your funds are preserved in a Roth rather than having the money end up in a taxable account. Of course, two errors are very unlikely if you are careful enough when requesting the transfer. And a large CU is less likely to mess this up than a small one.

Submitted by Bill Briner on Mon, 2020-03-16 13:22

Thanks Alan.

Submitted by Bill Briner on Mon, 2020-03-16 14:28

Alan – a consolidation of funds from several Roth IRA certificates into my Roth IRA savings account at my current credit union should not count as a rollover, is that correct?  If that is correct, then I would think rolling over this entire Roth IRA savings account, originally made up of several different CD’s,  would only count as one 60-day rollover.  I know trustee-to-trustee transfers are preferable to the one valuable 60-day rollover per year, but I’m concerned about the 2-4 weeks it usually takes to complete a trustee-to-trustee transfer compared to a rollover I could complete in a few hours today.Taking this a step further, it seems like the step of combining the funds is really unnecessary if I just withdraw the funds in the same visit and leave the credit union with a single check.  Thanks for your guidance. 

Submitted by Alan - IRA critic on Mon, 2020-03-16 16:00

  • Yes, any such consolidation within the same CU should be treated as “same trustee transfers” and not generate a 1099R and not be treated as distributions. No distribution, then no rollover. That said, if you are over the 250k FDIC limit, you would not want to consolidate even more, you would need to split the account into different CUs or banks.
  • I think most CUs treat each certificate as a separate IRA account. However, you might check to see if yours has placed all the certificates into just one IRA account for Roths and one for TIRAs. That would be somewhat helpful, but you still cannot risk a distribution that will generate more than one 1099R. And the IRS has no authority to waive the one rollover rule. You need to make sure that all funds are moved by direct transfer or at the worst use only your ONE allowed 60 day rollover.
  • One possible solution if you want to hold large CDs over the limit with just one bank is CDARS as described in the link below. I think some CUs are also members, you might check into that as it could simplify things at a small cost. See link below.
  • https://www.safemoneyplaces.com/who-is-the-cdars.html

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