T-IRA RMD + 60 day rollover
I have encountered a fact pattern that I have not previously come across. All help and guidance is greatly appreciated
T-IRA owner, 72, has 2 IRAs
IRA #1 holds mutual funds
IRA #2 holds a VA (income rider has been activated)
Owner satisfies RMDs (from each IRA) via monthly installment payments
Earlier this year client took 2 distributions (in addition to monthly installment payments) in the amounts of $10K & $50k respectively – totaling $60k – funds were earmarked to help pay for a home for his child, however the purchase fell through.
**Client’s RMD was only partially satisfied at the time of the 2 distributions – however the 2nd distribution of 50k more than satisfied 2019 RMD
Client subsequently rolled over (repaid) the first distribution in the amount of $10,000 within 60 days
Questions(s)
Is it possible to rollover (via 60 day) 2nd distribution of $50k minus the amount ($15k) that satisfied the RMD – In other words can $35,000 be rolled over? Or does the first distribution/rollover of $10k count as his once-per-12 months rollover?
Was the $10,000 roller allowed? My reason is “no” because at the time he hadn’t satisfied his RMDs RMDs can’t be rolled over. Assuming my logic is sound – how is that corrected?
Note:
$10,000 distribution taken on 4/23 and repaid (rolled over) 6/21
$50,000 distribution taken on 6/13
Permalink Submitted by David Mertz on Tue, 2019-07-02 19:17
Permalink Submitted by Alan - IRA critic on Tue, 2019-07-02 19:22
Your post appears to apply to the same client as the thread titled ” 12 month IRA rollover”. Please review that thread and to avoid confusion any additional comments should be made to the other thread, which has already received several posts. However, in this post you indicated the large distribution was to purchase a home for his child. The child might qualify as a first time homebuyer if child meets the requirements, but the client’s IRA is the distributing account so if client used up the 10k limit himself from his IRA previously, then this would not be a first time homebuyer distribution. Why is this relative? Because if such a purchase falls through, the client can roll back the funds to the IRA in 120 days (not 60 days), and it would not count against the one rollover limitation. So it affects the time limit and whether that distribution could also be rolled back or not. Either way, the arcane RMD rules discussed in the other thread continue to apply.