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Rollover IRA
Old 03-14-2009, 07:15 PM   #1
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Rollover IRA

Something coming up new in my financial situation and wondered if anyone has been through this. I just sold a brokerage IRA-CD through Fidelity and I am going to roll over the funds into another IRA-CD at another institution. I'm going to try to have the funds wired in order to eliminate having to prove the rollover; however, if that doesn't work out and I am issued a check, what will I have to file with the IRS to show that the rollover took place. I know I have 60 days to do this. Do I have to roll over all the funds? Is this a big deal or just some paperwork (which I dearly love)? Anyone out there gone through this?
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Old 03-14-2009, 09:50 PM   #2
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I've done it once...wanted to transfer funds to PenFed CU from Schwab.
As a semi-porous fence to keep funds in-house, Schwab charges an outrageous fee to transfer funds directly (in fairness, perhaps they have some paperwork to do also). However they will cut you a check for free to do the rollover yourself so I did that instead.

Early next yr you will receive a 1099R from Fidelity showing the funds distributed. You need to report that on your 1040 line 15a (IRA distributions). If you rollover the full amount , the transaction will not be taxable so you will put 0 on line 15b(taxable amount). If you don't rollover the full amount, the amount not rolled over is potentially taxable (less so if you had non-deductible IRA contributions in the past which will complicate the calculations). As proof of the rollover, you should keep statements showing the dates of the transactions being within the 60 day window. Generally not a big deal.

You will need to remember not to violate the once/12 mo. rollover rule
on both sides of the transaction tho direct transfers are ok.
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Old 03-14-2009, 10:22 PM   #3
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Quote:
Originally Posted by JOHNNIE36 View Post
Something coming up new in my financial situation and wondered if anyone has been through this. I just sold a brokerage IRA-CD through Fidelity and I am going to roll over the funds into another IRA-CD at another institution. I'm going to try to have the funds wired in order to eliminate having to prove the rollover; however, if that doesn't work out and I am issued a check, what will I have to file with the IRS to show that the rollover took place. I know I have 60 days to do this. Do I have to roll over all the funds? Is this a big deal or just some paperwork (which I dearly love)? Anyone out there gone through this?
yeah, did it for my father. You got 60 days. Tell the new bank/institution this is a rollover, they will send you a statement confirming it. Whatever you don't rollover in time, gotta pay tax/penalty on it.

It's no big deal, just let other institution know what you are doing, they will check the correct boxes, get copy of their paperwork and your home free

jug
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Old 03-15-2009, 12:11 AM   #4
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Originally Posted by kaneohe View Post
You will need to remember not to violate the once/12 mo. rollover rule
on both sides of the transaction tho direct transfers are ok.
kaneohe, I'm sure I could look this rule up, but can you give me any details? I rolled over an IRA in Dec. '08 and will probably want to roll over another IRA this year. Could that be an IRS conflict if I don't wait 12 months or is the rule about the SAME IRA being rolled over AGAIN. Seems I recall something about the latter, but not the former. Am I close?

Thanks!
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Old 03-15-2009, 01:08 AM   #5
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kaneohe, I'm sure I could look this rule up, but can you give me any details? I rolled over an IRA in Dec. '08 and will probably want to roll over another IRA this year. Could that be an IRS conflict if I don't wait 12 months or is the rule about the SAME IRA being rolled over AGAIN. Seems I recall something about the latter, but not the former. Am I close?

Thanks!
Koolau,

yes, you're close. Common IRA Rollover Mistakes

scroll down to the 12mo. rule.........was hoping to google up an IRS pub but I'm pretty sure it's the same as in the referenced article. edit: much safer to do a direct transfer than a rollover.

btw.....took your advice about dramamine (or similar) on the Tasman Sea
you said to always be prepared ........and was glad I did. Might have survived w/o it but it would have been an ordeal even if I had, so thanks for that.
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Old 03-15-2009, 02:17 AM   #6
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kaneohe,

Thanks for the info. Hope to be moving IRAs/401(k)s and converting to Roths for the foreseeable future (at least until RMDs).
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Old 03-15-2009, 11:33 AM   #7
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Thanks to all for the responses and great info. Especially to "kaneohe" for the rule on IRA transfers limited to one per year. I could have violated this rule since the IRA I'm transferring was purchased in Nov '08. However, as I understand it, the rule does not apply to direct transfers such as "trustee to trustee" or "institution to institution". I also read that a direct transfer would include a check from the transfering institution to the new institution "for the benefit of_ _ _ _ " and the entire amount should be rolled over. Also, from what I've read, the direct transfer is not even reported, but I find this hard to believe. Nowhere could I find the penalties for violating the 12 month rule. In my case, the settlement date is Tuesday 3/17 and I'm going to try for the rollover the same date. Wish me luck.
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Old 03-15-2009, 02:16 PM   #8
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Couldn't find a penalty for violating the 12mo. rollover rule but guess it would be similar to this for the 60day rule: (from IRS pub 590?)

Rollovers completed after the 60-day period. In the absence of a waiver, amounts not rolled over within the 60-day period do not qualify for tax-free rollover treatment. You must treat them as a taxable distribution from either your IRA or your employer's plan. These amounts are taxable in the year distributed, even if the 60-day period expires in the next year. You may also have to pay a 10% additional tax on early distributions as discussed later under Early Distributions .
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