60-day rollover after income tax withholding from withdrawal

Submitted by Bill Briner on Sun, 2022-11-13 02:52

I’d like to have income tax withholding from a Roth IRA withdrawal before the end of this year. After having 99-100% of the withdrawal withheld, can I redeposit the entire amount of the withdrawal early next year as my once every 12 months rollover? Since they changed the rules to only allow 1 rollover every 12 months, I have never used this option, so hopefully I won’t get into a similar situation for more than another year. Thank you.



Submitted by Bill Briner on Sun, 2022-11-13 03:56

Just in case it’s important, I forgot to mention that the funds being redeposited in early 2023 to complete the late 2022 Roth IRA withdrawal/early 2023 60-day rollover will come from my 2023 IRA Required Minimum in January 2023.

Submitted by David Mertz on Sun, 2022-11-13 12:14

  • Yes, you can do that.  As long as the rollover is completed within 60 days, there is no problem with completing the rollover early the following year.  This allows you to manufactures tax withholding for the current year which can make up for underpayment of taxes earlier in the year (which an estimated tax payment will not do) and also allows you to do it effectively using funds that will not be available until early next year.
  • To make sure that you are not in this situation with your 2023 taxes, you might want to consider how much to have withheld from your 2023 RMD distribution, assuming that the RMD will more than cover the rollover of the Roth IRA distribution.  In case you might end up in a similar situation in 2023, you’ll probably want to take the Roth IRA distribution now rather than waiting until later in 2022 so that the one-year period during which you are unable to take a distribution that is eligible for rollover expires in mid-November 2023.

Submitted by Bill Briner on Sun, 2022-11-13 14:43

Thanks for not just answering my question, but also making a great suggestion.  I worked with someone who once told me not to just answer the question a person asked, but to look behind that question for something else they hadn’t thought to ask.  You just did that! 

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