Distribution from an IRA

[mjf624]

Hi,

Can anyone let me know if the 60 day rollover rule would apply for a distribution to an IRA to a deceased participant? Meaning they took a distribution in cash (no withholding) and now have changed their mind. Thanks.

[Lou S.]

How does a deceased person change their mind?

I'm assuming you mean the beneficiary took the distribution in cash. I'm pretty sure they can still rollover to an Inherited-IRA if they are in the 60 day window.

[Borsley]

I don't believe a distribution should ever be made to a person that is known to be deceased. If it was, can you return the check indicating the IRA owner is deceased and then work through the process the custodian requires for the beneficiary to take a distribution, rollover, or setup inherited IRA? If person is deceased, assume the check isn't cashed?

[finn36]

I took a $20,000 distribution from my IRA with the intent to buy a condo. My plans changed and I did a rollover back into my IRA.  The problem is that it was not within the 60 days. It was actually 62 days. I messed up, I thought it was within the 60 days. Is it true I am double taxed on that money?  Basically meaning I have to pay tax now and then because it was put back into my IRA inadvertently, I will be taxed again in the future when it is withdrawn.

[Mike Preston]

Three things:

1) You may be able to establish that the rollover was allowable.  See the following link:

https://www.irs.gov/retirement-plans/retirement-plans-faqs-relating-to-waivers-of-the-60-day-rollover-requirement

2) If you can't, then you made an ineligible rollover and should distribute the funds from the IRA by the applicable annual deadline.  You didn't say what date you made the rollover so I can't tell you what the deadline is.  If you did this in 2016 then I think the deadline is the due date of your 2016 tax return, which might be 4/18/2017 (i.e., you don't have much time).

3) If you fail to remove the rollover by the applicable annual deadline, you incur a 6% cost for each year it remains in the IRA past the deadline.  You are not taxed on the distribution amount to the extent that it represents a return of the rollover.  You are taxed on any earnings that are distributed.

Good luck.