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60-DAY ROLLOVERS AND ELIGIBLE DESIGNATED BENEFICIARIES: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF®
IRA Analyst
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@theslottreport

QUESTION:

I have a client where we did a 60-day rollover this past January. The proceeds were put back into the account in less than 60 days. The client has asked me to rollover the 403(b) plan he’s had sitting with his former employer. Is this a second rollover violating the once-per-year rollover rule?

Thank you

Jay

ANSWER:

Jay,

You are wise to consider the one-rollover-per-year rule before completing any 60-day rollover. A person is only allowed one 60-day rollover per 365 days. However, the one-rollover-per-year rule is not applicable to plan-to-IRA rollovers. You can do as many of those as you wish. So, in your situation, the 403(b) asset can be rolled to an IRA without violating any rules. However, your client will need to wait until at least next January before he can do another IRA-to-IRA 60-day rollover.

QUESTION:

An eight-year-old daughter inherited her father’s 401(k) plan this year (2022). It was rolled into a traditional inherited IRA account. Does she have to take an RMD based on her life expectancy tables beginning in 2022, and then at age 18 deplete the balance over the next 10 years?

Steve

ANSWER:

As a minor child of the original account owner, the eight-year-old daughter qualifies as an eligible designated beneficiary (EDB) and is permitted to stretch RMD payments over her own single life expectancy. The first RMD will be in 2023 and she will use the factor from the Single Life Expectancy Table for age nine (75.9). For each year thereafter, she will subtract one from previous year’s factor. This will continue until she reaches the age of majority – 21. At that time the 10-year rule will apply. The daughter can continue the RMD payments for another 10 years, but the account must be emptied by the end of the 10th year.

https://www.irahelp.com/slottreport/60-day-rollovers-and-eligible-designated-beneficiaries-todays-slott-report-mailbag

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