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IRA Rollover and Direct Transfers

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Last Updated On
Bycar-tows

L1: IRA Rollover and Direct Transfers
Please advise if an IRAaccount established with a 60 day IRA rollover, can accept a direct rollover transfer from a 401K – code G or a direct transfer from another IRA which does not have a 60 day rollover involved.
Thanks, Bob2008-01-17 14:36, By: car-tows, IP: [72.86.12.216]

L2: IRA Rollover and Direct TransfersThat”s OK under the rollover rules. The 12 month one rollover limit per IRA account refers to distributions FROM an IRA or FROM an IRA that accepted such a rollover. The IRA that received the rollover can accept any number of incoming contributions, whether done by rollover or direct transfer.
The IRA that is receiving all these funds cannot be the source of an outgoing rollover until 12 months have passed from receiving the 60 day rollover. Therefore, if this IRAbecomes the source ofa 72t plan, flexibility to make a corrective rollover to avoid a 72t error is restricted for that 12 month period. For example, if under the plan too much is taken out, it then cannot be rolled back to the plan.
A non related potential problem is that under the bankruptcy act provisions, the 401k rollover would have unlimited protection, but by combining it with an IRA that ever received regular contributions, the entire account may be subject to the 1,000,000 limit. This is only a problem is the account ever exceeds 1,000,000 plus inflation or if the taxpayer lives in a state that does not offer full IRA creditor protection.2008-01-17 15:07, By: Alan S., IP: [24.116.165.60]

L2: IRA Rollover and Direct TransfersAlan,
Thanks for your detailed answer. I have one more question:
Am I correct thatdirect IRA transfer(s) are permitted out of the rollover account,within the 1 year rolloverperiod?
Thanks, Bob2008-01-17 16:14, By: car-tows, IP: [72.86.12.216]

L2: IRA Rollover and Direct TransfersBob,
Yes, direct transfers do not count in any way in considering the rollover rules. You can make as many as you wish. Of course, these transfers can bust your 72t plan in certain cases if the IRA is active as a 72t plan. Other than 72t considerations, there are no restrictions.2008-01-17 19:15, By: Alan S., IP: [24.116.165.60]

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