60 Day Rollover Rule
Client removed 50k from Trad IRA on 5/1/25 and another 50k on 6/1/25.
Rolled over 100k back to IRA on 6/15/25 within 60 day window and had not done a 60 day rollover in preceding 12 months.
I assume this example above if compliant but didnt know if the multiple distributions added a wrinkle. I assume the first distribution date starts the 60 day clock and any distributions in between the 60 day window are eligible to be rolled back?
Permalink Submitted by Alan - IRA critic on Thu, 2025-08-21 10:31
Yes, unfortunately the one 60 day rollover allowed over a 12 month period is measured by the distribution, not the rollover contribution. It would therefore be OK to have taken a 100k distribution and rolled it back in pieces over the 60 day period, but because two distributions were taken, only one of them is allowed to be rolled back. The IRA custodian should have known this if they were both rolled back to the same account, but many of them are clueless about this rule.
In this case, only one of the 50k distributions can be reported as rolled over, and the other is taxable and an excess contribution to the IRA that must be removed as an excess contribution with applicable gain or loss. The custodian will have to determine the amount of gain or loss just like any excess contribution.
The IRS discourages short term loans for IRAs, and 10 years ago revised their interpretation that the one rollover should apply to all owned IRAs, not just per account, although it sounds like these distributions were from the same account.
To address this rule, if a taxpayer does need a short term loan, they should distribute more than they think they need, as they can then roll back the amount they don’t need within 60 days. If this client had taken a 100k distribution on 5/1, they could have rolled the portion they did not need back in pieces as long as the roll backs were completed within 60 days.