In kind rollover

Submitted by Sten Lindquist on Tue, 2020-04-28 14:38

Client took an in kind distribution from their IRA for their 2020 RMD in Feb. Do they have to roll over the same shares back to the IRA or could they sell the shares and rollover the proceeds? Could they rollover other cash in the amount of the in kind distribution?



Submitted by Alan - IRA critic on Tue, 2020-04-28 15:57

No, they cannot. While not the case for qualified plans, IRA in kind distributions can only be rolled over if the same shares are rolled back. Further, I think that if someone sells the shares and then becomes aware of this rule, they cannot re purchase the same issues and complete the rollover. They would have to report a cap gain or loss for the shares they sold and that would be inconsistent with rolling over replacement shares.

Submitted by Kimberly Flett on Thu, 2020-05-28 01:56

Hello, would you comment on the reference for this prohibited rollback? Is this from the IRC or a FINRA issue?

Submitted by Alan - IRA critic on Thu, 2020-05-28 03:03

  • It’s in the IRC. Following bullet point is IRS Reg 1.408-4(b). Note that “any other property “(than cash) must be included in the rollover contribution. This is also stated in Pub 590 A under “Rollover from one IRA to another”:
  • (b) Rollover contribution -(1) To individual retirement arrangement. Paragraph (a)(1) of this section shall not apply to any amount paid or distributed from an individual retirement account or individual retirement annuity to the individual for whose benefit the account was established or who is the owner of the annuity if the entire amount received (including the same amount of money and any other property) is paid into an individual retirement account, annuity (other than an endowment contract), or bond created for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution.  

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