one rollover 60 day for IRA

Submitted by Douglas Bauerband on Mon, 2020-07-13 17:39

Have women who rolled over her IRA husband’s IRA when he passed last year. She received the check and then wrote out a check to the bank for her own IRA for a 5yr CD (not a year old yet, March 2021)

The bank will let her take out the whole IRA as a check (not transfer) without any penalty but will not allow a transfer without a penalty.

She wants to take it out of the CD with the bank.

a. Did the Cares act relief package allow more than one rollover now in the same year?

or…

b. if she takes the check from the bank and cashes it and then writes out another check to an investment company, it will all be taxed since it is within one year of the last rollover?

thank you
Douglas



Submitted by Alan - IRA critic on Mon, 2020-07-13 17:51

Unless she qualifies for a CRD she will not be able to do a current 60 day rollover. The spousal rollover she did earlier this year counts against the one rollover limitation. Therefore, she will have to pay the direct transfer fee to the bank to move the funds, and will also have to pay an early withdrawal penalty for the CD itself, making for two different penalties for breaking the CD and moving the funds. 

Submitted by Douglas Bauerband on Tue, 2020-07-14 16:13

We are not transferring or rolling over the IRA until the year is up, which is August 8, 2020.But how does the IRS monitor the 60 days so she knows what time to go into the bank and get a check?a. date of when her husbands IRA company cut the check to her last year in 2019?b. When she recevied the check from her husbands IRA company?c. When she cashed the check from her husbands IRA company?d. When she funded her own IRA with the Bank from her husbands IRA?Thank you,Douglas

Submitted by Bruce Steiner on Sat, 2020-07-18 15:29

We once had an audit, mainly on other issues, but the return showed a rollover, and the agent wanted us to document that the rollover was in fact done within 60 days.

Submitted by Alan - IRA critic on Tue, 2020-07-14 16:35

  • The date the distribution is received starts the 12 month waiting period if the taxpayer rolls over that distribution. The custodian is supposed to make an effort to monitor these dates and not accept rollover contributions if they violate the rule. However, the effectiveness of this is limited to the custodian who actually knows the date of the distribution, so is limited to roll backs to the same IRA account or at least another IRA with the same custodian. The IRS can sometimes tell from matching 1099R forms to 5498 forms in some cases or at least they may notice a pattern to justify an audit. Or they might find out if they do a complete audit triggered by an unrelated matter.
  • In this case, the 12 month period starts on the date she received the distribution from her husband’s IRA. The date she rolled that over does not matter. She cannot roll over another distribution from any of her IRAs to another IRA (except a conversion is OK) for the 12 months following the date of the first distribution that was rolled over.

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