Direct rollover from qualified plan to traditional IRA

[Guest Eddie Elizondo]

Is a qualified plan direct rollover distribution check dated over 60 days payable to the new IRA trustee (not the particpant), still qualify for a tax free rollover?

[Mary Kay Foss]

The 60 day rule applies to the participant not to the trustee or custodian. Sec. 408(d)(3) regarding rollovers provides an exception to inclusion in gross income for "any amount paid or distributed out of an individual retirement account ... to the individual for whose benefit the account is maintained" if it's rolled over within 60 days.

Sec 402 also defines rollover as a "distribution to an employee of all or any portion of the balance..."

It seems odd that the check would have such a stale date but often I see custodian-to-custodian transfers that take more than 60 days.

One of our local employers often makes checks out to a custodian even when no rollover is contemplated and sends them to the plan participant. We've had no difficulties with this because the income on the 1040 has been higher than the zero balance on the 1099-R.