This week's Slott Report Mailbag includes questions about helping your grandchildren pay for the ever-rising cost of college tuition plus the intricate 60-day IRA rollover rule. As always, we stress the importance of working with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Find one in your area at this link.
1.
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Susan
Answer:
You will be taxed on the full amount of the IRA withdrawal (unless you have after-tax funds in your IRA) even though you gave it to your granddaughter for college tuition. The IRA withdrawal will automatically count towards your RMD if you have not yet taken all of it at the time of the withdrawal.
2.
I took out $20,000 from my IRA last month in two withdrawals. I'd like to complete the rollover of $20,000 with one deposit to my IRA during the 60-day rollover time frame from the time of the first withdrawal. Is this a permissible qualified rollover? Is the one time within in one year refer to the distribution or the redeposit rollover?
Answer:
If the two withdrawals were taken on two different days from the same IRA plan, then only one of them is rollover eligible within 60 days. The one-rollover-per year rule (12 months) begins on the day the distribution is received by you, not when it is redeposited (rolled over).
-By Joe Cicchinelli and Jared Trexler
2 comments:
I have several IRA Certificate of Deposits maturing from the same bank within a matter of weeks that I want to with draw and deposit in another bank. These CDs have different account numbers. Will I run afoul of the one rollover per year rule if I do this?
If you don't do a direct trustee-to-trustee transfer, at least have the withdrawal checks made payable to the new bank, not to you.
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