Employer Plan to Trad. IRA Indirect Rollover – Two Rollover Contributions Before 60 Days
If an individual does a distribution from an employer retirement plan, say $400,000, and has the check sent to him. He will receive $320,000 because of the 20% withholding. If he rolls over the $320,000 into a Traditional IRA within 60 days, can he make another rollover contribution of $80,000 as long as it is also within the 60 day window?
Permalink Submitted by Alan - IRA critic on Tue, 2020-01-07 23:09
Yes, the withholding can be replaced with other funds to complete the rollover within 60 days. All this can be avoided by doing a direct rollover since that avoids withholding.
Permalink Submitted by Michael Piotrski on Wed, 2020-01-08 17:00
The person has already rolled over the $320,000 to his IRA. So, you are saying he can make an additional rollover deposit of $80,000 to his IRA as long as it is done within the 60-day limit? The fact that he makes two rollover deposits does not matter?
Permalink Submitted by Alan - IRA critic on Thu, 2020-01-09 00:30
Correct. You may be thinking about the one rollover per 12 month limitation. There are two reasons that doesn’t apply here. First, this limit only applies to rollovers between IRAs of the same type. In this case, an employer plan is making the distribution. Second, even if the distribution had been from an IRA, the limit applies to the number of distributions, not to the number of rollover contributions. There was only one distribution, which could be rolled over on different dates.