60 day rollover using multiple roth ira

L1: 60 day rollover using multiple roth iraI have 7 roth ira accounts with about $100,000.00 in each of them. I plan to withdraw $100,000.00 from ira#1 and pay it back with withdrawal from ira#2 within 60 days. I’ll then withdraw $100,000.00 from ira#3 to pay back ira#2, so on and so forth. Is that a feasible plan to indefintely avoiding tax and penalty for early roth ira withdrawal? Is there a 20% tax withheld for each withdrawal? 2004-10-23 21:39, By: kel, IP: [24.90.236.198]
L2: 60 day rollover using multiple roth iraHello Kel:
Your plan works & is legal. Further, there is no required withholding on an IRA withdrawal. However, there are two pitfalls to your plan:
1. You are destined to make 7 withdrawals/repayments ever year until you either stop the plan or attain age 59 1/2. If this is just for a year or two fine, but for 10 or 20 years it does become a burden.
2. Additionally, every 55 days or so you need to create cash in the Nth+1 IRA so it can be withdrawn to repay the Nth IRA. This tends to limit your investment opportunities and horizons.
TheBadger
wjstecker@wispertel.net
2004-10-23 22:22, By: TheBadger, IP: [66.250.23.22]

L2: 60 day rollover using multiple roth iraHelp me understand the logic of this process. I’m always interested in new ideas, and I do understand the “legality” of the process, but I fail tosee any logic in doing it.
How do youget any “spendable” money out? If the money isinvested for 10 months of the year and earns 5% per annum, that’s about $4,167 earned by each IRA per year. But if you take $100,000 out of an IRA and 60 days later put it back, your earnings effectively remain within the IRA.
Seems like a large “shell game” wherby one has a pair of pants with 7 pockets and you simply move rocks from one pocket to another indefinitely.
Jim2004-10-27 09:06, By: Jim, IP: [68.1.157.228]

L2: 60 day rollover using multiple roth iraHello Jim:
I am not advocating the process but I can see how it might be useful:
1. Say, to make a downpayment on a house that you otherwise could not do.
2. To make an investment in a non-IRA eligible asset.
Like you, I do not see muchvalue in this strategy under normal circumstancesother than a differential tax rate advantage which can easily evaporate.
Lastly, one slip in the execution and one is typically looking at 45% taxation.
TheBadger
2004-10-27 10:23, By: TheBadger, IP: [66.250.23.22]