indirect rollover

Submitted by Larry Burgess on Tue, 2020-04-21 21:16

A client age 74 has been taking monthly RMD distributions from his IRA. With the CARES Act provisions, he’d like to return the March and April distributions via an indirect rollover back to his IRA. There were two distributions paid out but will only be one deposit to return the funds within 60 days of the first one. Is this acceptable given the “one indirect rollover per 12 months period” rule since there is only one check going back in?



Submitted by Alan - IRA critic on Tue, 2020-04-21 21:40

  • No. The one rollover per 12 months limit is applied to the number of distributions, not to the number of rollover contributions. Therefore, only one of these distributions can be rolled back (if they are equal, better to roll back the March distribution). But the other distribution can be converted to Roth, which while still taxable is a better outcome. The rollover or conversion deadline has now been extended to 7/15/2020.
  • However, should client qualify for a corona virus distribution, then both of these distributions can be rolled back up to 3 years from date of distribution. The IRS may expand the qualifications for this, so client might be better off to do the one allowed rollover now and wait until end of June to determine if client will qualify, and if not then do the conversion of the other distribution.

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