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February 16, 2009

Outstanding Rollover

Your Guide

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Definition

Distributions taken from an IRA during one year and rolled-over to the same or another IRA during the following year.  For instance, a distribution taken in December of one year, and rolled over in January or February of the following year.

These rollovers are required to be completed within 60-days of receipt.

Referring Cite

IRC § 402(c)(3) , § 408(d)(3),  Treas. Reg. §1.402(c)-2, Q&A-11

 

Additional Helpful Information

 

An outstanding rollover is required to be added to the previous year-end fair market value (FMV) of the receiving IRA when calculating the required minimum distribution (RMD) for the year. For instance, if a distribution is taken in 2009 and rolled over in 2010, it must be added back to the 12/31/2009 FMV when calculating the RMD for 2010. Failure to add the outstanding rollover to the FMV will result in the calculated RMD amount being less than what it should be, causing the IRA owner to owe the IRS an excess accumulation penalty of 50% of the RMD shortfall.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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