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Stupid Rollover Question
Old 10-12-2018, 09:24 AM   #1
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Stupid Rollover Question

Been investing for 40 years and fine tuned my FIRE planning over the five years before retirement last year but, just this morning, I realized I might have missed something really valuable.

I have been fine tuning taxable income this year to take advantage of zero percent capital gains on significant ETF sales and use up remaining real estate loss that I have had to carry over for a few years (no longer have rental property, now my primary residence). My taxable income (MFJ) will be right at $101,400 which after standard deduction will keep me at zero capital gains.

My problem is getting ready for 2019; I need to withdraw money in January from my 403(b) in order to pay significant bills coming due. Adding to problem is that I will be out of country from early December until early February and Fidelity requires notarized signature by my wife for any transfers out of 403(b). My plan had been to establish a Rollover IRA (non-taxable event) and fund it in early January (Fidelity rep would hold onto notarized transfer form until first of year).

Today, I am thinking that maybe funding of the Rollover IRA is also NOT a taxable event; i.e., if I transfer 100K of FXAIX from 403(b) to Rollover IRA (FXAIX is supposed to be available for non institutional accounts) it would not affect 2018 taxes.

Was my old way thinking accurate (i.e., I cannot fund IRA until 2019) or is my new thought accurate (i.e., I can fund IRA now).

thanks,

Marc
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Old 10-12-2018, 09:34 AM   #2
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Sometimes the way we state a problem precludes some viable solutions. It seems that your problem is a dearth of available cash for maybe 5 weeks. Right?

I have had a similar problem where I needed some cash at the end of December and didn't want to draw IRA taxable income until January. I simply used the line of credit that I have set up as overdraft protection on my checking account. So the solution to your problem may be as simple as calling your bank and setting up an overdraft protection account. IIRC mine is currently at $10-20K but I have had credit limits up to $50K in the past.
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Old 10-12-2018, 09:54 AM   #3
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Today, I am thinking that maybe funding of the Rollover IRA is also NOT a taxable event; i.e., if I transfer 100K of FXAIX from 403(b) to Rollover IRA (FXAIX is supposed to be available for non institutional accounts) it would not affect 2018 taxes.

It shouldn't be a taxable event. As you transfer money from one to another it just has be be coded correctly. So if you do a portion of your 403(b) make sure that either Fidelity codes it correctly or you do it when you do your taxes. Also make sure you have backup to prove that the full amount was transferred (check stub or printout)
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Old 10-12-2018, 12:32 PM   #4
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Quote:
Originally Posted by Bir48die View Post

It shouldn't be a taxable event. As you transfer money from one to another it just has be be coded correctly. So if you do a portion of your 403(b) make sure that either Fidelity codes it correctly or you do it when you do your taxes. Also make sure you have backup to prove that the full amount was transferred (check stub or printout)
Thanks for the advice. Just got off phone with Fidelity; rep explained that it would be coded "G" as a direct transfer. Opened up rollover iRA online while on phone. Paperwork for transferring shares "in kind" will be snail mailed to me to be signed by my wife and notarized. Very easy process.

Only doing small partial transfer even though brokerage account fees have dropped because of better protections with 403(b) account; I figure one or two partial transfers per year until RMD sets in; then I have to be a little more careful.

Again, thanks,

Marc
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Old 10-12-2018, 01:52 PM   #5
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Yes, a rollover is not a taxable event... you can do it now.
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