60 day rollover

Submitted by Robert Roselli on Mon, 2024-11-18 14:00

I have a client doing a real estate closing where they haven’t sold their house, but they are closing on their new house on Wednesday. I plan to send the funds from the client’s IRA to the title company and the client should sell their home before the 60 days are up, worst case they move funds from their brokerage account. Is it a problem if I send money from my client’s IRA to XYZ Title Company for the closing and then replenish the funds within 60 days? A colleague of mine is concerned the 60-day rollover won’t be allowed because I will be sending the proceeds to a different payee (meaning not the client). Is this going to be an issue if I send the funds directly to the title company or should I send it to his joint brokerage account first and then wire the funds? My understanding is the custodian will issue a 1099-R whether I wire funds to the title company or move it to a brokerage account and as long as I show proof it’s back within 60 days, I’m fine.



Submitted by Alan - IRA critic on Mon, 2024-11-18 15:02

You could make out the check to the title company, and the 1099R will be the same as if the check was sent to the client. That said, intending to meet the 60 day rollover deadline based on a real estate closing is very risky since any number of problems could delay that closing. These delays have resulted in many taxpayers ending up with tax and penalty on the distribution that did not get back in time.

Of course, you also need to be sure that the client did not distribute any other amount in the prior 12 months that was rolled over (only one 60 day rollover allowed in a 12 month period).

Submitted by Robert Roselli on Mon, 2024-11-18 16:11

Thanks for the feedback and you are correct, it is risky. The client has 300K in a brokerage account. The wire will be for 129K so they can definitely get the money back in there in time. A colleague I work with thinks the distribution being paid to someone else makes it ineligible for a 60-day rollover. I told him the client would get a 1099-R no matter what. Does the IRS ever audit and dig into who the distribution was sent to or do they not care?

Submitted by Alan - IRA critic on Mon, 2024-11-18 17:39

All distributions are treated as if made to the IRA owner regardless of the check payee. QCDs are an example of this as the QCD check is payable to the charity and the IRA owner receives a 1099R that is no different than a 1099R for any distribution to the IRA owner. The IRS does not care where the money goes. In this case the client can complete the rollover from the brokerage account funds, but in that case they would have to sell holdings in the brokerage and could incur some cap gains taxes.

Add new comment

Log in or register to post comments