IRA accounts

[DTS]

Is it permissible to withdraw money from an IRA account, repay it well within the 60-day period and then do a rollover from another account into this account?

To me, it seems it would be OK since the second rollover is not subject to the 1 rollover per 12 month rule. However, my concern is a person may not be able to have anymore activity in the account, with regards to rollovers.

Any help will be appreciated.

Dennis

[Bees Knees]

TTB, page 13-23 says the following:

1-year rule. If any part of a distribution from a traditional IRA
is rolled over tax-free, no other rollover from that same IRA is
allowed within a 1-year period. Likewise, a distribution from
the IRA that accepted the tax-free rollover cannot be rolled over
within the same 1-year period. The 1-year period begins on the
date the IRA distribution is first received, not the date it was
rolled over into an IRA.

Your case is different than either of the two above because it is not the same money being rolled over more than once per year. You have an IRA that distributes money and then takes it back as a rollover. Then that same IRA accepts new money from another IRA as a rollover. That is OK. The restriction, however, is once that IRA accepts money from another IRA as a rollover, it has to wait at least one year before it can distribute money as a rollover to another IRA.

[DTS]

Follow-up questions

Bees,

Thank you so much for the answer I had been looking for. I would like to ask you two follow-ups for future information:

1) Can additional rollover amounts from separate IRAs be added to this combined rollover in your example?
2) If any money IS distributed from this IRA in your example, do both rollovers become disqualified and ALL of it become taxable and, possibly subject to 10% if the account holder is under 59 1/2?

Thanks for your reply,

Dennis

[S T]

IRA rollovers and distributions

These rules are so complicated and hard to understand, but from what I can discern from Bees post is that another rollover from a "different" account is permissable, it would be whether or not there was a distribution from that original rollover account within the 12 month period??

But I question, the 60 day (take out the money) rule more than once a year for your t/p, unless the monies were all distributed from different accounts, then I think you are okay, but not quite sure! More research and substantiation.

Would it be adviseable to request that the t/p provide you with all of the appropriate statements from all of the appropriate accounts, so you can track exactly what he/she transacted during the 12 month period into the rollover account/s? Might your client have violated the 60 day rule on holding some monies from the same account or too many distributions from the rollover account??

I think now I have even confused myself, as I am sorting out one that is on my desktop right now.

So hopefully Bees or someone else will help us sort this out. Once you obtain the numbers and a/c #'s maybe an example of $$ and a/c numbers will help.

Sorry everyone, I am a look at the numbers and examples person!


Sandy

[Bees Knees]

It is hot. My AC isn’t working too good, and the cat keeps wanting me to throw her toy so she can play fetch. I might not be thinking too straight at the moment. But I’ll try once more.

Basically, you can’t allow money to be rolled over more than once per year. You can, however, move money from multiple IRAs into the same IRA. So for example, you have IRA 1, 2, and 3.

You borrow money from IRA 1, and within 60 days, you put it back into IRA 1.

Fine, that is your rollover for IRA 1 money for the year.

Then IRA 2 wants to join forces with IRA 1 within that same year and all of IRA 2 is rolled over into IRA 1.

Fine, IRA 1 is still intact and you haven’t violated its one rollover per year limit because the money in IRA 1 hasn’t moved more than once per year.

Now all of a sudden, a portion of IRA 1 wants to visit IRA 3. You can’t argue that this part of IRA 1 that hops over to IRA 3 is the part that didn’t get rolled over from IRA 1 to IRA 1, or wasn’t the part from IRA 2 that went to IRA 1, because once any money gets blended into IRA 1, all of it is mixed together. In other words, any and all money leaving IRA 1 to go to IRA 3 no longer qualifies for tax free rollover treatment, and is now taxed as a distribution.

Did any of this make sense? Did it answer your question? My head is starting to spin. I think I’m starting to see little lights float by on my computer screen….

[DonPriebe]

Those aren't little lights ...

My head is starting to spin. I think I’m starting to see little lights float by on my computer screen….

They are the remains of the white-out you used to edit the last response you wrote. I find that if I use my laptop I can use an ordinary eraser on the screen instead of using white-out on the desktop CRT.

(On my old DOS machine I needed green white-out. Or is that green-out?)

[S T]

Post helped me

Bees,
Your a/c might not be working correctly, and the cat has tired you out and distracted you, but your post on IRA distributions and rollovers helped me to sort out for future reference.

Client's just have no knowledge of what issues they can present us with after the fact and expect us to waive the magic wand and make it go away. All we need from them is a road map of what their transactions were a year or two ago (wishful thinking).

Thanks for being here on the Board,

Sandy

[DTS]

IRAs

Bees,

You are funny! Sorry about your eyes and spinning head.

Thank you for the further explanation. Like Sandy said, this stuff can get so confusing to many of us, but you made it much more understandable.

Dennis

[Bees Knees]

(On my old DOS machine I needed green white-out. Or is that green-out?)

Oh I stopped trying to use white out on my computer screen years ago. I could never figure out how to keep the text covered up when I scrolled down the page.

[Davc]

It is hot. My AC isn’t working too good, and the cat keeps wanting me to throw her toy so she can play fetch. I might not be thinking too straight at the moment.

Obviously, or you would be throwing the toy instead of typing.