Fx Rollover

[Marketta Filipovich]

Youhave 60 days from the date you receive an IRA or retirement plan distribution to roll it over to another plan or IRA. The IRS may waive the 60-day rollover requirement in certain situations if you missed the deadline because of circumstances beyond your control.

You generally cannot make more than one rollover from the same IRA within a 1-year period. You also cannot make a rollover during this 1-year period from the IRA to which the distribution was rolled over.

Under the basic rollover rule, you don't have to include in your gross income any amount distributed to you from an IRA if you deposit the amount into another eligible plan (including an IRA) within 60 days (Internal Revenue Code Section 408(d)(3)); also see FAQs: Waivers of the 60-day rollover requirement). Internal Revenue Code Section 408(d)(3)(B) limits taxpayers to one IRA-to-IRA rollover in any 12-month period. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii), published in 1981, and IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) interpreted this limitation as applying on an IRA-by-IRA basis, meaning a rollover from one IRA to another would not affect a rollover involving other IRAs of the same individual. However, the Tax Court held in 2014 that you can't make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding 1-year period (Bobrow v. Commissioner, T.C. Memo. 2014-21).

If you have not elected a direct rollover, in the case of a distribution from a retirement plan, or you have not elected out of withholding in the case of a distribution from an IRA, your plan administrator or IRA trustee will withhold taxes from your distribution. If you later roll the distribution over within 60 days, you must use other funds to make up for the amount withheld.

The plan administrator must give you a written explanation of your rollover options for the distribution, including your right to have the distribution transferred directly to another retirement plan or to an IRA.

If you receive an eligible rollover distribution from your plan of $200 or more, your plan administrator must provide you with a notice informing you of your rights to roll over or transfer the distribution and must facilitate a direct transfer to another plan or IRA.

A veterinary practice was a sole proprietorship. The retiring veterinarian sold the practice to a young veterinarian. The retiring veterinarian's 401(k) plan was terminated, and participants were given distribution paperwork when it was time to wind down the plan.

The new veterinarian started a new 401(k) plan immediately, so there was no gap in providing a retirement plan benefit for the employees. Some employees had elected to roll their funds from the prior practice's plan into the new plan, and others did not.

Assuming that you accurately described the corporate aspects of the transaction and that you did not omit any aspects of the plan transsactions, the money rolled into the new plan is rollover money. There is no meaningful concept of "related rollover money" or "unrelated rollover mioney" -- at least no valid concept that has general acceptance of those terms. The assumptions determine the conclusions, so if you are not completerly confident with the corprate aspects and understand how any diferences woudl affects the final conclusion, then you need to ask soem other questions, such as nature of the acquisiton (equity or asset sale) and timing of the termination of the original 401(k) plan.

A. The rules for handling rollovers and transfers depend upon whether they are unrelated (both initiated by the employee and made from a plan maintained by one employer to a plan maintained by another employer) or related (a rollover or transfer either not initiated by the employee or made to a plan maintained by the same employer). Generally, a rollover or transfer made incident to a merger or consolidation of two or more plans or the division of a single plan into two or more plans will not be treated as being initiated by the employee. The fact that the employer initiated the distribution does not mean that the rollover was not initiated by the employee. For purposes of determining whether two employers are to be treated as the same employer, all employers aggregated under section 414(b), or (m) are treated as the same employer. In the case of unrelated rollovers and transfers, (1) the plan making the distribution or transfer is to count the distribution as a distribution under section 416(g)(3), and (2) the plan accepting the rollover or transfer is not to consider the rollover or transfer as part of the accrued benefit if such rollover or transfer was accepted after December 31, 1983, but is to consider it as part of the accrued benefit if such rollover or transfer was accepted prior to January 1, 1984. In the case of related rollovers and transfers, the plan making the distribution or transfer is not to count the distribution or transfer under section 416(g)(3) and the plan accepting the rollover or transfer counts the rollover or transfer in the present value of the accrued benefits. Rules for related rollovers and transfers do not depend on whether the rollover or transfer was accepted prior to January 1, 1984.

Have a 401(k) plan that was comprised of three auto dealer stores with common ownership. The owner sold off two stores and retained the third. One of the Non-Key Employees with a rather sizeable balance was initially part of the two stores that were sold off and her assets transferred with her.

I am a CISSP whos 3-year CPE cycle ends sometime in February or March this year (2021). On 11/17/2020 I attended a security conference in which I earned 6.5 class A CPE credits. My understanding is that these should apply as rollover credits for the new 3-yr cycle beginning in 2021

Currently I'm showing 126.5 credits against the current cycle. When my new cycle begins, will those 6.5 rollover credits automatically be subtracted from the 2018-2021 cycle and appear on the 2021-2024 cycle?

Rollover CPE Credits

CPE rollover credits are limited to the number of recommended annual CPE credits each year for that credential, and must be earned within the last six months of the three-year certification cycle, in excess of the required CPE credits for that certification. For example, a CISSP may only roll over up to 40 Group A CPE credits (in excess of the required 120 CPE credits) if they were earned within the final 6 months of the previous three-year certification cycle. These rollover CPE credits will be eligible to satisfy the annual recommended CPE credits for the first year of the next certification cycle. Note that there is no rollover provision for Group B credits.

Thx Craig. Yes they were Type A credits. Mainly I was unclear on how the rollover policy would be reflected in the online tools. Based on your reply, I will expect the online tracking tools to migrate those 6.5 credits to my new cycle around March.

What I would like to do is rollover half of my funds from my prior 401(k) into my new employers 401(k). Than take a loan against my new 401(k) (rollover funds) and use those funds to pay off my outstanding loan with my prior employer's 401(k) plan? Can I do this to avoid the 10% distribution penaly + 20% in taxes? Or is there any easier way to pay back the prior loan?(I don't have enough cash on hand to pay it back within the 90 days).

That should work just fine. You'll need to ask the benefits person/dept at your new employer to find out how the rollover check should be made payable (due to certain rules, some places are very picky about the wording, you can make it go smoother by getting the wording they want used).

You'll then ask for a "direct rollover" from your prior employer. In a direct rollover, the check is paid to the new plan and not to you. This avoids w/holding. By doing the rollover, you'll avoid any tax or penalty.

Thank you! I called my prior employers 401(k) administrator and they will allow me to do a partial rollover. I called my current employer's 401(k) administrator and I am eligible to take a loan up to 50% with out any waiting period. Perfect! (well at least I think so....)

Loans from 401(k) plans are not always the cheapest borrowing available. Even if the interest rate is low, loan initiation fees from 401(k) plans can sometimes be quite high. Particularly if you're borrowing short term, a large loan initiation fee coupled with possible ongoing loan maintenance fees from your new 401(k) plan could make for a very high cost of borrowing. You might look into other commercial sources for a loan and compare the costs. Make sure you go into this fully informed.

The fact that I could keep several thousand dollars of interest rather than leaving it with a bank seemed to me to be a major effect in my personal outcome when I considered a 401(k) loan. I will concede the penalty situation is an issue which some borrowers may dismiss too lightly. I can't assess that accurately because I can't judge another borrower's level of desperation and the penalties do not apply in my situation.

I suppose if the person in my hypothetical had an irrational dislike of banks he might be swayed away from the commercial loan. Other than that, could you please illustrate the financial difference in the two scenarios in the hypothetical?

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