IRA rollover

[jkmpost]

I am trying to reduce my retirement income for 2022 by $745.  I can't contribute to an IRA because I am not working and I was told that was a requirement to make contributions to affect last years taxes.  I read that the IRS allows rollover or put money distributed back into an IRA within 60 days of it being dispersed.  

1.  Can I do this?

2.  If I do this will it lower my AGI for 2022?

3.  Do I return the entire month distribution? Gross or net? or can it be a partial return?

My state has a cap of $100,000 where you don't pay income tax. Over that all pension, SS and annuity income is taxable.

[SantinoD · Accepted solution]

Yes, you can rollover money distributed back into another Retirement account or the same account it was withdrawn from. The amount put back will not be considered taxable as long as you follow the 60-day rule.

60-day rule- A taxpayer has until the 60th day following a distribution to make a rollover contribution. Distributions that are not rolled over in 60 days are taxable in the year distributed, even if the 60-day period expires in the following year. Contributions made after the 60-day period are treated as regular contributions.

As long as you satisfy the 60-day rule, this will lower your AGI for 2022.  You can return any amount you choose, whether full, partial or more. Since your cap is $100,000 of AGI, I recommend returning the amount that will get you under that cap.

Here are the steps to enter a rollover into TurboTax:

1. Search for 1099-R and select the Jump to link in the search results
2. Continue through the screens to import or enter your 1099-R form
3. When asked Tell us if you moved the money through a rollover or conversion select I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days) and select Continue
4. On the next screen, Did you roll over all of this (Box 1) to another retirement account? answer Yes, I rolled over to an IRA or other retirement account (or returned it to the same account) and select Continue

[jkmpost]

Thank you SantinoD. I have checked on returning the money to the account it came from but the TSP does not allow for that so it would have to be a new IRA account. 

[VolvoGirl]

I don't think you can put back a pension payment.  You can rollover if it's a from a 401K account.  @dmertz 

[jkmpost]

VolvoGirl

Thank you for your response,  The money I would be rolling over is money that came out of my TSP (401k) retirement account not my pension.  I have called the TSP and they have told me that the rollover would be reflective as of today and would not reduce the AGI for 2022 which is what I need to do.  I believe the only option is to roll a sufficient amount into an IRA within the 60 days the IRS provides for.  Is that a possible solution for this situation, in your mind? 

[dmertz]

Whether or not you are permitted to roll over any of the distributions depends on how you are receiving distributions from the TSP.  See pages 4 and 5 of TSP publication TSPBK25: https://www.tsp.gov/publications/tspbk25.pdf