Reply To: Rollover

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Alan S.

Hello, Bruce.

No, the replacement of the 20% withholding is treated as a partial rollover of the 401k distribution, and there is no limit to the number of qualified plan distributions that can be rolled into an IRA. The original withholding never was deposited into the IRA, therefore the IRA 1099R will be limited to the personal needs distribution done later and replaced. The IRA one rollover per 12 month limit only applies to distributions taken from an IRA (but not converted to a Roth). Therefore, as long as there are no other IRA distributions to be rolled over within the 12 month period, this taxpayer has no issues.