IRA Rollover

Archive for May, 2010

Question: 60 Day IRA Rollover?

I want to take distribution from my Ira Rollover Account with the intention of redepositing the funds back in the same rollover account within 60 days. WIll this violate any IRS rules because my intention are not to rollover to another plan?

Answer: See IRS Publication 590. Nothing prohibits changing your mind and redepositing a rollover back into the same account it came from. Just don’t be late. 2 things to be aware of:

There is manditory 20% withholding from an eligible rollover if distribution is to you. When you put the money back in, you need to add that missing 20% back in from another source, or that withholding would be taxed/penalized. If you do everything on time, you could adjust your W-4 or 1040-ES to recover the withholding sooner that waiting until filing next year.

If you take a rollover from an account, you cannot take another rollover from that account for a year. And similarly if you put a rollover into an account, you cannot put another rollover into that account for a year. However, a direct trustee-to-trustee transfer to another qualified account is not subject to withholding or rollover frequency limits, if you later want to move any of it to a different trustee directly.

IRA 60 Day Rollover