60 day rollover of multiple distributions | Ed Slott and Company, LLC

60 day rollover of multiple distributions

We have a client who has taken a distribution each month beginning in January in order to satisfy his 2020 RMD.
Now that he does not have to take his 2020 RMD, he would like to roll back those that are within the 60 day window.
Is that allowed for all that qualify?
Or is he only allowed to roll one of the previous distributions back into his IRA?

  • Unless he qualifies for a corona virus related distribution, he can only roll one distribution back within 60 days of the distribution, and can do that only if he did not roll over a prior distribution in the 12 months prior to the one rolled over. He has a deadline of 7/15 to roll back one of these distributions, and he would benefit by electing the Feb distribution for roll back if all distributions are equal.
  • The other distributions can be converted to a Roth IRA because conversions are not counted for purposes of the one rollover limit. However, because he has until 7/15 to do these conversions (he will owe tax and possibly penalty anyway), he should wait to see if the IRS broadens the eligibility for corona virus distributions. If so, he could roll them all back, including the January distribution. If no changes by the end of June, he should proceed with converting the distributions taken in Feb or later that were not rolled back to the TIRA account.

I have the same facts ( january, February and March distributions) and Fidelity has insisted on limiting the roll back to one monthly distribution. Wouldn't any February 1 - May 15 distribution be corona virus related and not subject to the one distribution limit?

  • "Wouldn't any February 1 - May 15 distribution be corona virus related and not subject to the one distribution limit?"
  • *Any* distribution?  No.  "Coronavirus-related distributions" are those made to someone who, or whose spouse, has received a positive result on a CDC-approved test or "who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate)."  The IRS has yet to provide guidance on what other factors might apply.  Assuming that these distributions were already-scheduled monthly distributions, it might be challenging to establish that these distributions were made due to a coronavirus-related hardship.
karekin.g.kaprelian@ampf.com's picture

Wouldn't any February 1 - May 15 distribution not be subject to the one distribution limit due to the CARES Act waiving 2020 RMDs?"

No, only distributions that qualify as Coronavirus-Related Distributions are disregarded with respect to the one-rollover-per-12-months limit.  If the distribution does not qualify as a CRD, it does not escape the rollover limitation.

We are proceeding with rollback of a quarterly RMD taken in April but the RMD was split with Fed taxes taken and paid to IRS with net amount to client.  With rollback to IRA, doesnt client have to rollover the gross amount back to IRA?  If a clawback from IRS is rolled back into IRA separate from net amount from client on different dates, wouldnt this be considered two rollovers within one year?

  • Partial rollovers are permitted.
  • To roll over the entire April distribution by the rollover deadline of July 15, the individual would need to substitute other funds for those withheld for taxes.
  • Multiple rollover contributions made to rollover a single distribution are permitted.  The limitation is on the number of distributions that may be rolled over, not the number of rollover contributions made to roll over a single distribution.
 

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