February 26, 2019 at 6:47 pm #2436
Assuming I have not made any 60 day repayments during the preceding 12 months,
Can I repay any part of the distribution within the 60 days?
For example, I take a distribution of $40,000 on March 1. On March 30, I repay $20,000 of the distribution. In this case, I will only owe tax on the $20,000, correct?
Just want to make sure I can repay any part of the total distribution within the applicable time frame ( i.e. 60 days from date of distribution)February 27, 2019 at 3:55 pm #2441
Yes, you can roll over all or any portion of a distribution within 60 days, and be taxed on the remainder. This rollover, regardless of amount then locks you out from doing another distribution and rollover for the next 12 months. Also, note that the one rollover limit is measured by the distribution. Therefore, you could take a 40,000 distribution and roll 20,000 back within 60 days and you could also roll another 10,000 back to the same or a different IRA account within 60 days. Since there was only one distribution in this example, you are allowed as many rollovers of that 40,000 as you wish.February 27, 2019 at 4:14 pm #2442
Alan, thanks for the comments.
So, I could do multiple rollovers up to the amount of the distribution if they occur within 60 days of the initial distribution? That would be considered “one” rollover?February 28, 2019 at 6:25 pm #2453
Yes, you could do multiple rollovers as long as they are from just one distribution. However, if you wanted to make one rollover contribution from more than one distribution, that is not allowed. Only one of those distributions could be rolled over.March 4, 2019 at 3:28 pm #2483
So, it does not have to be the most recent, correct?
For example, distribution of $35,000 on Feb 15 and distribution of $20,000 on March 4. I could choose to repay the Feb 15 within 60 days, even though I received another distribution subsequent to that withdrawal.March 5, 2019 at 2:06 am #2487
Yes, that is correct. You can roll over any distribution still within 60 days of receipt.
If you were stuck with two distributions for which you still had the money to roll both back, you can choose which one to roll back.
But there is some damage control for the other one. You could convert it to a Roth IRA within 60 days, because a conversion is not subject to the one rollover limit. Your money would not be lost from an IRA, would not be hit with a 10% penalty, and your money would be in a more preferential IRA type, a Roth. It would eventually become tax free and would have no RMDs.
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