Roth 60 day rollover

[JG EA]

Does anyone know if there is a requirement to withhold anything (like the 20% on an IRA distribution) when funds are taken out by the taxpayer? He plans to put into another Roth within the 60 days.

[S T]

Rollover Withholding

Isn't there a mandatory 20% withholding - if the funds are not directed as a "direct rollover" ?

Withhold 20% of an eligible rollover distribution unless the recipient elected to have the distribution paid in a direct rollover to an eligible retirement plan, including an IRA. With certain exceptions, an eligible rollover distribution is the taxable part of any distribution from a qualified plan, governmental Internal Revenue Code section 457(b) plan, tax-sheltered annuity, or IRA.

After Jimfrmbx posts - I read a little further, and it would appear that an IRA distribution does not require the 20% withholding, so I am not sure on the quote I obtained from the IRS site above that states IRA. TTB on page 13-22 states no 20% withholding requirement on IRA. Seems like it only applies on Employer Amounts being transferred to an IRA if not Direct Rollover.

Weren't there some old rules for the withholding on IRA Rollovers not being Direct?

Now I am confused and have probably confused everyone else

Sandy

[Gretel]

This is what I thought but there either isn't or a local bank screwed up badly for a client of mine who dissolved his IRA bought a trailer home from the funds plus supported extended family. Only part of the distributions included withholding. He owes 40,000 to the IRS and cannot pay since he is on disability.

[Gary2]

My reading of the instructions for the 1099-R is that there's generally no 20% withholding requirement for IRAs. For a traditional IRA, periodic payments are subject to withholding as if they were wages, while a non-periodic payment is subject to 10% withholding.

However, for a Roth IRA, there's no withholding requirement at all, except for the earnings part of an excess contribution that's distributed.

Again, this is all my reading of a set of instructions that isn't as clear as I'd like. I suggest reading them yourself, or getting a more experienced opinion.

[S T]

More Info

I guess we need more info from JG-

I read the OP as being a distribution from an IRA to the Taxpayer - who then would take those funds and rollover to another IRA or ROTH within the 60 day rule.

Sandy

[jimfrombx]

I don't believe there is any requirement to withhold taxes on a withdrawal from a Roth or Traditional. The requirement is for pensions and 401K's.

[JG EA]

Thanks all. Now that I read pub 590 again, I see the 20% withholding is in context of an employer plan. I thought it did apply to regular IRA withdrawals also, but as poiinted out it does not.