IRA ROLLOVER BY CHECK
Rollover from IRA #1 to IRA #2. If I write a check from IRA #1 PAYABLE to IRA #2 — so the funds are never in my possession — does that use up my one-every-12-months “indirect” rollover limit ? or would that be a “trustee to trustee” transfer ?
Permalink Submitted by David Mertz on Wed, 2020-07-08 17:25
The custodian of IRA #1 won’t pay any attention to the payee and will treat the check as a distribution from IRA #1, resulting in it being present on a Form 1099-R, so it would be seen as a distribution and rollover, not a non-reportable trustee-to-trustee transfer, and would be subject to the once-per-12-months rollover limitation. If you want to do a trustee-to-trustee transfer, make the proper arrangements to have the custodian of IRAs #1 treat it as such by having the one of the IRA custodian’s initiate the transfer. The most reliable method tends to be to initiate the transfer at the custodian of IRA #2 so that the transfer has the best chance of ending up where it should. Many IRA custodians have forms that go back and forth between custodians before the actual transfer takes place, coordinating the transfer and minimizing the chance for error. Much easier than arguing your case before the IRS if the transaction is ever questioned.