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Traditional IRA rollover question

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    Traditional IRA rollover question

    Taxpayer's who are 66 yrs old took money out of spouses traditional IRA to pay cash for a house with intentions to pay it back within the 60 day rollover period. The husband was expecting a big inheritance to pay back the IRA. The inheritance money isn't going to be here in time to meet the 60 day rollover deadline.

    Can the taxpayer (the husband) take a distributions from his IRA to pay back and meet her 60 day rollover deadline? And then when he gets his inheritance within in a few weeks, then he can pay back his IRA within the 60 day period?

    Will that work?

    I know there is some limitations on the number of rollovers you can do, but is that per taxpayer?

    Thanks.

    #2
    Originally posted by nwtaxlady View Post
    Can the taxpayer (the husband) take a distributions from his IRA to pay back and meet her 60 day rollover deadline? And then when he gets his inheritance within in a few weeks, then he can pay back his IRA within the 60 day period?
    I can't see why not.

    However this highlights the dangers of relying on future inheritance money, as many things can go unexpectedly. What if another sixty days goes by without receiving the funds?

    Comment


      #3
      Originally posted by Rapid Robert View Post
      I can't see why not.

      However this highlights the dangers of relying on future inheritance money, as many things can go unexpectedly. What if another sixty days goes by without receiving the funds?
      I think they should simultaneously apply for a home mortgage (or possibly a HELOC) when making the withdrawal from the husband's IRA. They can always cancel the loan before it closes if the inheritance timing works out. The up-front transaction fees on the mortgage or HELOC might be pretty good insurance against paying the taxes on the entire withdrawal if the inheritance doesn't show up by the time the husband's 60 days expire.
      Last edited by JohnH; 05-07-2018, 02:48 PM.
      "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

      Comment


        #4
        Originally posted by JohnH View Post
        I think they should simultaneously apply for a home mortgage (or possibly a HELOC) when making the withdrawal from the husband's IRA. They can always cancel the loan before it closes if the inheritance timing works out. The up-front transaction fees on the mortgage or HELOC might be pretty good insurance against paying the taxes on the entire withdrawal if the inheritance doesn't show up by the time the husband's 60 days expire.
        Good response with a suggested recommendation to consider in this scenario.
        Always cite your source for support to defend your opinion

        Comment


          #5
          Originally posted by nwtaxlady View Post
          I know there is some limitations on the number of rollovers you can do, but is that per taxpayer?Thanks.
          Yes. IRA accounts are in individual names and each taxpayer has the once-per-12-month option.

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