60 day rollover

Submitted by Larisa Kutac on Fri, 2020-07-10 16:23

December 2019 client took a withdrawal from IRA account. The client did put the withdrawal back within the 60 day rollover time frame, but the institution coded the 60 day rollover in 2020. Does the client need to discuss with tax accountant, so they do not get taxed on the amount took in December 2019.



Submitted by David Mertz on Fri, 2020-07-10 17:49

  • Since the rollover contribution occurred in 2020, it’s reportable on a 2020 Form 5498 rather than on a 2019 Form 5498.  This is of no consequence with regard to reporting the rollover on the 2019 tax return.  Called an “outstanding rollover,” the IRS sometimes questions these, but are satisfied with a simple explanation that the rollover was completed with the 60 day but after year-end, perhaps accompanied by an account statement to substantiate that the 60-day deadline was met.
  • The tax accountant just needs to make sure that in any calculation involving the 2019 year-end balance of this account (say, on Form 8606 line 6, if needed, or in calculating the amount of a 2020 RMD with respect to this account) that the year-end balance is adjusted to include the amount of the outstanding rollover.

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