60 day rollover
I have a client that took an ira distribution of $600,000 with the intent of doing a 60 day rollover within several days. the 600k went to his bank PNC via ACH with the intent of his Bank wiring the money to its final destination BMO Harris bank for the closing of a large transaction which would create a large amount of cash which he would use to replace the 600k back into his IRA. PNC had problems sending the 600k wire and in a panic he asked us to send a wire directly to BMO Harris bank the following day a second distribution. he now wants to put the full amount back into his IRA as a 60 day rollover. The problem he is only allowed 1 rollover per year, he took 2 rollovers on consecutive days and now wants to put them both back. ANY IDEAS????
Permalink Submitted by Alan - IRA critic on Fri, 2021-06-25 22:50
He is only allowed to roll one of the distributions back to the IRA, and that assumes that he did not roll over another distribution taken in the prior 12 months. The only good solution is participating in an employer plan such as a 401k or 403b that will accept a rollover from an IRA, as the one rollover limit does not apply when an employer plan is on one end of a rollover. If he does not have access to such a plan, there is also a Plan B, but it only partially reduces the damage. Plan B would call for client converting the other distribution to a Roth IRA, and conversions are not subject to the one rollover limit either. But the conversion would be taxable, although the 10% penalty would not apply. This would also result in 600,000 added to his Roth, which has some obvious advantages such as no RMDs and tax free gains, but he would still owe tax on 600,000.