CARES Act IRA Rollover

Submitted by Samuel Sexton on Wed, 2020-05-06 14:10

Hello!

I have a client who was taking monthly withdrawals from their IRA to meet their RMD.

Question #1: With the CARES Act guidance allowing for distributions between February 1 and May 15th to be put back via a 60 day rollover, can my client aggregate their withdrawals from February through May 15th and put them back in one indirect rollover, or does bunching them violate the 1 in 365 days rule? Is only one monthly distribution allowed to be rolled over.

Question #2: If bunching is allowed (in Question #1 above), can you point me to an instruction on this point from the IRA or authoritative body? I am finding nothing.

Question #3: I am assuming they are out of luck on putting the January monthly withdrawal back into their IRA. Is this correct?

Thank you!

Sam



Submitted by David Mertz on Wed, 2020-05-06 15:18

  1. No, only one of the distributions can be rolled back to a traditional IRA unless they can be considered to be Coronavirus-Related Distributions (CRDs).  They cannot be aggregated and treated as a single distribution.  The other distributions could be rolled over to a qualified retirement plan or taxably to a Roth IRA as a Roth conversion; rollovers of traditional IRA distributions to these types of accounts are disregarded with respect to the one-per-12-months rollover limitation.
  2. The limitation in the tax code explicitly applies per distribution, not per rollover contribution, so you won’t find anything that allows aggregation of the distributions for the purpose of a rollover.  See the example for “Application of one-rollover-per-year limitation” in IRS Pub 590-A.  https://www.irs.gov/pub/irs-pdf/p590a.pdf
  3. The present IRS guidance does not allow a January distribution to be rolled over after 60 days unless it can be considered to be a CRD.  This probably doesn’t matter much in this case because of the one-per-12-months rollover limitation.

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