CRD retirement account distribution | Ed Slott and Company, LLC

CRD retirement account distribution

A client is looking to take a CRD from his 401k this year. he was furloughed but not sure he will need the funds? if he takes a distribution from both the Roth bucket and the traditional bucket and ends up not needing the money will he be able to roll those monies into a Roth IRA and a traditional IRA? or is that not allowed based on the one rollover per 12 months rule?

The one rollover limit will not apply to CRD repayments, and client will also have 3 years from the CRD distribution date to make any repayment. The TIRA distribution can be repaid in any combination into  eligible retirement plans including a Roth IRA, but the Roth distribution can only be rolled back into a Roth IRA.  These options will include filing IRS Form 8915, new edition 8915 E yet to be released.  Finally, note that his 401k plan may or may not offer CRDs.

 

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