Rollover of 2020 SEP-IRA Distributions | Ed Slott and Company, LLC

Rollover of 2020 SEP-IRA Distributions

This past January a client took a $48,000 distribution from his SEP-IRA to meet his 2020 RMD, and his wife took $12,000 from her SEP-IRA to satisfy her RMD. The wife died in March, and the client took her SEP-IRA and transferred it to his SEP-IRA. Can the client now put the $60,000 back into his SEP-IRA? Appreciate your comments on this.

  • With respect to the 48k distribution, to date the IRS has not provided rollover relief for January distributions to be rolled over. However, if client qualifies for a CRD at some point this year, he will be able to roll over that distribution up to 3 years from January, 2020. It is also possible that furture guidance will allow the rollover even without qualifying for a CRD, but at this point the distribution is not eligible to be rolled over.
  • With respect to the 12,000 distribution, the above also applies. But in addition, despite several IRS PLRs that have allowed the executor of the deceased spouse to rollover a pre death distribution to an inherited IRA, some custodians might require client to secure their own PLR to accept the rollover. A 12k distribution is not worth the cost of pursuing a PLR, so even if the above requirements are met, the client would probably limit their rollover efforts to finding a custodian that would allow an inherited IRA to be created to accept the rollover.
 

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