Technical topics regarding tax preparation.
17-Sep-2019 1:18pm
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Hello Tax Pros,
Got a client that lumped-sum a pension and moved it over into an IRA. Client wants to move part of that IRA into another IRA. So from Lumped Sum Pension -> IRA -> partial move to another IRA.
Will this fall under the IRA One rollover per year rule?
Would appreciate the help, thx!
17-Sep-2019 1:35pm
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If the funds are moved by a trustee to trustee transfer they are not subject to the one rollover per year rule.
17-Sep-2019 5:33pm
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NOTE: the trustee-to-trustee transfer is not available for pension-to-IRA move. So your client HAD to use his "once" on that one. But moving it around now to different IRA accounts can all be trustee-to-trustee.
17-Sep-2019 7:53pm
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I think you will be OK with your approach . The first transaction where you transfer/rollover from your pension to your IRA is not counted as an IRA rollover . (not IRA to IRA )
18-Sep-2019 8:20am
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Joan TB wrote: But moving it around now to different IRA accounts can all be trustee-to-trustee.
As a side note, I don't think that is always true. I have never been successful in getting a trustee to trustee transfer from an IRA at a brokerage firm to or from an IRA in an FDIC-insured bank account (e.g. CD).
18-Sep-2019 9:34am
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lucyko: My bad. You are right. However, I noticed that the instructions seems to say that multiple rollovers from the employer plan during the year must be from the SAME employer plan to be OK. Do you know anything further? Just thinking of a retired TP who has more than one plan due to multiple employers in the past that were never previously closed out.
makbo: True - the CD has to be either matured or broken. At that point, it goes into some other IRA account (think savings account) and the trustee-to-trustee transfer happens from there. The CD itself cannot be transferred since it is a contract with that institution.
And yes, I have done those trustee-to-trustee transfers between bank & broker successfully.
18-Sep-2019 12:50pm
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I was talking about a mature CD, in the short grace period before the bank auto-renews it. There is no other IRA account available at the bank to transfer the money to. I guess there is no rule or reg against it, but I've had trouble with both credit unions and banks in this regard. I guess I'd rather manage the once per year restriction on 60-day rollovers, than take a chance that the bank/brokerage mess up the transaction in the short time window provided.
Isn't it also considered a trustee-to-trustee transfer if a check is made payable to the other institution, something like "BigBuxFirm IRA custodian FBO Joe Taxpayer", or something like that?
18-Sep-2019 3:45pm
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makbo wrote: Isn't it also considered a trustee-to-trustee transfer if a check is made payable to the other institution, something like "BigBuxFirm IRA custodian FBO Joe Taxpayer", or something like that?
This is the exact case where the client had the pension written out to "Bank FBO Client's name" from that Money Market IRA, she will move partial of it to another IRA.
That's where I kind of got confused
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