60 Day Rollover Rule

Hi,

I am wondering if you may know the answer to this.

Situation:
1. Person borrowed $150k from IRA. Needs to repay by July 31st. Obviously this is a rollover according to the 60 day rule.
2. End of July person wants to take $187,500 401k distribution (they are over age 59 ½) subject to 20% mandatory withholding would net them $150k. They will repay the 60 day IRA rollover.
3. Then in early Sept they will receive a large amount of cash and will take $187,500 and deposit into the IRA to accommodate what was taken from the 401k. This seems to meet the exemption from the one year rule as a “plan to IRA” rollover…. But I can’t find clarification. anywhere.

Does above violate the one 60 day rollover per year rule?

Thank you,
Kathy



3 can’t work.  you can’t just put $187,500 into the IRA from some “large amount of cash” they received.  EDIT – I reread the OP and see my error.  You would be completing the rollover from the 401k into the IRA in September. The issue with that is still the 20% withholding that you will not get back until tax filing.  Still think the following -Perhaps a better approach would be to take a loan from the 401k to roll into the IRA to complete the rollover, then in September, take the “large amount of cash” and repay the loan to the 401k. -m



The one-per-12-month rule does not apply to rollovers to an IRA from a qualified retirement plan like a 401(k). The one-per-12-month rule only applies to IRA-to-IRA rollovers.  Rolling over the $187,500 distribution from the 401(k) to a traditional IRA within 60-days would therefore not violate the one-per-12-month rule.



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