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60 day rollover rule

By Terry Savage on June 13, 2021 | Financial Planning / Retirement

Hello Terry I am a WGN listener living in Seattle, WA and I have a question about the 60-day IRA rollover rule. I took a distribution from my work 401(k) plan and deposited it into an IRA. Because I am over 59-1/2, I was able to do this without penalty or tax implications. I then withdrew some money from my IRA account as a personal short-term bridge loan. I want to return the money to the IRA account now and am within the 60 day period. My question is, can I split the money into two different IRA accounts, putting 1/2 of it into the IRA I originally took it out of and 1/2 of it into another IRA account I have with a different broker or do I have to put it all into one IRA account? I know that I don’t have to put it back into the original account, but I do not know if I can split it into two accounts because I do not know if by doing so, I will be violating the rule that says you can only do one 60 day rollover per every 12 months, in other words, if the second IRA is considered a second rollover. I hope that makes sense. Thank you.

Terry Says

First, you may have already violated the one rollover per year rule, if you did the transition from the 40l(k) to the IRA within the past 12 months — and now are hoping to do another! So when did you do that original rollover?? The second withdrawal for your “loan” may be considered a taxable distribution if the two transactions were made within 12 months of each other!

Here’s what the IRS says about this issue:

IRA one-rollover-per-year rule
You generally cannot make more than one rollover from the same IRA within a 1-year period. You also cannot make a rollover during this 1-year period from the IRA to which the distribution was rolled over.

Read more here.

And if you do qualify because the initial rollover was more than a year ago, I would DEFINITELY put the entire amount back into the first IRA. You are just asking for trouble from the IRS and custodians if you divide it into two new IRAs. I’m not sure how they will look at it in the end — but they WILL look at it, for sure!!!

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