IRA Rollover
If taxpayer withdraws money from two traditional IRA’s the same day and the total amount of the two withdrawals are contributed to one of the IRA’s within 60 days, does this qualify as a rollover?
If taxpayer withdraws money from two traditional IRA’s the same day and the total amount of the two withdrawals are contributed to one of the IRA’s within 60 days, does this qualify as a rollover?
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-17 23:28
No, the one rollover limitation is based on the number of distributions, not the number of rollover contributions. There were two distributions here, and only one of them can be rolled back. Taxpayer would normally roll the larger distribution back, but to minimize the damage from the other distribution, there are two options. If taxpayer has a current 401k or employer plan that accepts IRA rollovers, the other distribution could be rolled into that plan within 60 days to avoid tax and penalty. Or if that is not possible, taxpayer could convert the other distribution to a Roth IRA. There would still be tax due, but no penalty and taxpayer would have a more valuable (already taxed) Roth balance than a pre tax TIRA balance. Both of these two options apply because neither is subject to the one rollover limitation.
Permalink Submitted by Dirk Yoder on Mon, 2021-08-23 20:07
Thank you very much for your help!