I took a distribution from my 401(k) and got two checks because some of it is ROTH. I intended to do a 60 day rollover because I no longer need the funds right now.
But two checks, and two deposits, is this two rollovers? Maybe, but after closer inspection of the ONCE PER YEAR rule I see it does not apply. (and it's ''probably'' considered as one rollover anyway, with the two checks being withdrawn on the same day).
My interpretation of this publication found on IRS.gov, is not widely understood, and I have found no experts online who point this out: The once per year limit does NOT apply to 401(k) plans, rolling in or out. This means you can do several 60 day rollovers. If you are an expert and disagree with my interpretation, let me know quick. I have 40 days remaining to decide!
20% withholding is a requirement when you take the distribution. Be prepared to 'make up' the difference when you make the deposit. (The withholding will be refunded next year, but you may have to borrow the money short term! 😰
You will get a 1099-R with a 7 in box 7. (B in box 7 if it is ROTH funds). Leave the 7 or B. CONTINUE. Turbo tax will ask what you did with the money. Answer ROLLOVER. Do not fret over the word 'INDIRECT'. The word is not used in the tax form. It's either ROLLED or NOT.
I will not attempt to explain the 42 ways you can screw it up. Just follow the 60 day rules. Don't go past the 8th week. Leave yourself leeway in case something goes wrong.
The ONCE per year rule does NOT apply if the money goes directly from one account to another. Transfers are not even rollovers.
The ONCE per year rule does NOT apply if the check you receive is NOT made out in your name. It might say FBO (for the benefit of) and your name, but payable to your other bank.
The ONCE per year rule does NOT apply to qualified 401(k) plans.
If you have possession of the funds, it is in effect a 60 day interest free loan, and this is why it was limited in 2015, however, they still needed to allow employees to switch PLANS when they move jobs, so rollovers involving PLANS are not limited.
Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.
The one-per year limit does not apply to: 😀
- rollovers from traditional IRAs to Roth IRAs (conversions)
- trustee-to-trustee transfers to another IRA
- IRA-to-plan rollovers
- plan-to-IRA rollovers
- plan-to-plan rollovers
