Roth Contributions

Submitted by Larisa Kutac on Wed, 2023-08-02 14:49

We are rolling over a client’s Roth contribution from his 401k to his Roth IRA brokerage account. The institution made check payable to the client vs the new institution name FBO of client’s name. What is the best way to code the check when deposited into his Roth IRA. 60 day rollover?



Submitted by Alan - IRA critic on Wed, 2023-08-02 15:07

  • Since the distribution includes a share of gains, there should have been 20% of the gain amount withheld from the distribution. Client will have to replace the withholding using other funds to have a full rollover. Yes, this will be a 60 day rollover. If client does not replace the withheld amount, the rollover will be treated as coming from the Roth 401k gain first. Client will then have to adjust the Roth IRA basis unless the Roth IRA is already qualified (5 years and age 59.5).
  • Client should have requested a direct rollover unless there was another reason to request a distribution.

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