Withdrew 5 IRA's with intention to Rollover to a local bank. Not aware of the 1 rollover per year rule.

[fgoodiwn57]

Wife is 64 and still working. I'm 65 and retired at the moment. We have had  a combo of ROTH and Traditional IRA's for almost 10 years Through Invesco and Fidelity. Decided to move them to a Local Bank for easier access and stable returns. Long story short. We had the funds deposited to our checking account with intent to rollover to the local bank. Did not know about the 1 yr Roll over rule so now it looks like we will need to add  3 of them them as income. Since we are over 59 1/2 do we need to pay a penalty.  The Traditional IRA I assume will all be counted as income.  The  Roth's do we add the whole distribution as income or can we deduct the amount we contributed? Also should we do estimated payments because of this for this year? 

[Bsch4477]

No penalty since you are over age 59 1/2 and Roth withdrawals are not taxed. You could make estimated payment to cover the traditional IRA withdrawal. 

[fgoodiwn57]

The Roth  IRA's had earned interest, so would I not count just the earned interest as income on 2023 tax return?

[Bsch4477]

Since you had the ROTH more than 5 years and are over age 59 1/2 all withdrawals are penalty and tax free. 

[fanfare]

Pub 590-A

"Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you can’t, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA  (emphasis mine). You also can’t make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover."
you have multiple IRA accounts.

Too late if the 60-day rollover window has passed.

@dmertz   ?

@fgoodiwn57 

[fanfare]

I guess I'm wrong, the example in Pub 590-A says you can't do it.

@fgoodiwn57 

[fanfare]

just another example of Congress's sneaky efforts to weasel you out of your tax-deferred retirement money.

[dmertz]

The one-rollover-per-12-months rule is intended to prevent one from repeatedly abusing distributions and rollovers from an IRA as a short-term source of funds.

@fgoodiwn57 , in saying that no part of your Roth IRA distributions would be taxable, Bsch4477 has assumed that the owner has completed the 5-year qualification period.  It's not clear from your statement whether you've had Roth IRAs the entire 10 years or not.

For you to still be within the 60-day rollover window, your distributions would have to have been made in 2023.  If these distributions were made in 2022, it's too late to roll these over.  For the rest of this, I'll assume that you are still within the 60-day rollover window and you can still perform a rollover.

You said "we" had a combination of traditional and Roth IRAs.  The rollover limitation applies per person, so each of you could roll over one of your own IRAs.

For those traditional IRAs that would otherwise be violation or the limitation if rolled over, these can be converted to Roth since Roth conversions are disregarded with respect to the rollover  limitation .  You would still have the tax liability, but future growth would be tax free.  Rollovers to an employer plan like a 401(k) are also disregarded with respect to the limitation, so perhaps your wife's employer provides such a plan that will accept a rollover from her traditional (but not Roth) IRA(s).

Based on which of you owns a particular IRA, the type of IRA from which the distribution was made and the amounts, you could come up with a plan to minimize the long-term impact of having made these distributions.

[fgoodiwn57]

To clarify. All our IRA's were started in 2010, 2011 and 2012.  I had a Roth and Traditional and my wife had 2 Roth's and one traditional.  We had them deposited to our checking account 3-10-2023 and 3-11-2023. I'm 65 and retired, she is 64 and still working. No contributions were made to any of the IRA's in 2022 or 2023.

So if I understand this correctly:

1) The Roth's will not incur any penalty and will not be added as income on 2023 taxes. 2 ) The traditionals will not incur a penalty but will be added as income on 2023 taxes.

3)  She can rollover just one of these distributions to a like IRA ( Roth to Roth). And I can do the same for only one.

Thanks to all who have replied!

[dmertz · Accepted solution]

Since your original intent was to have the money remain in retirement accounts, I'll assume that you want to get some of these funds back into IRAs.

You have two options:

1. Roll over the traditional IRA distribution to another traditional IRA and keep the Roth IRA distribution, resulting in no taxable income but losing the potential for future tax-free growth in the Roth IRA.
2. Roll over your Roth IRA distribution convert your traditional IRA distribution to Roth, with the Roth conversion being taxable but future growth in the Roth IRA will be tax-free.

Your wife has two options:

1. Roll over the traditional IRA distribution to another traditional IRA and keep both of the Roth IRA distributions, resulting in no taxable income but losing the potential for future tax-free growth in the Roth IRAs.
2. Convert the traditional IRA distribution to Roth, roll over one of the Roth IRA distributions and keep the other, with the Roth conversion being taxable but future growth in the Roth IRA will be tax-free.

(You said these were traditional and Roth IRAs, so  I assume that none of these was actually an account in a qualified retirement plan like a 401(k), otherwise the options are different.)

[fgoodiwn57]

dmertz. Yes theses are all personal IRA's, no employer 401k's.

So I would be allowed to do the rollover and a conversion in the same tax year?

 Thanks for your help!

[dmertz · Accepted solution]

The tax code explicitly states that Roth conversions are disregarded with respect to the one-rollover-per-12-months limitation.  An individual can do any number of Roth conversions without regard to any IRA rollovers.