Life and Death Planning for Retirement Benefits

158

Life and Death Planning for Retirement Benefits

Some of the technical rules that apply to rollovers do not apply to IRA-to-IRA transfers (see ¶ 2.6.01 (E) for definition).  IRA-to-IRA transfers are not considered to be distributions from the transferor IRA, nor are they considered “contributions” or “rollovers” to the recipient IRA for IRS reporting purposes. PLR 2005-28031; Instructions for IRS Forms 1099-R and 5498 (2016), pp. 6, 19.  The participant can do an IRA-to-IRA transfer in a year in which an RMD is required even before taking the RMD; the transferring IRA is not required to either pay out or hold back the RMD for the year, according to the Preamble to IRS final minimum distribution regulations, T.D. 8987, 67 FR 18987, 4/17/02 (“Other Rules for IRAs”) .  Since, in an IRA-to-IRA transfer, money is never distributed out of the IRA environment there should be no 60-day deadline to contend with, even if the check does not reach the recipient IRA within 60 days after being sent out from the transmitting IRA, but see ¶ 2.7.02 .  Funds can be transferred via IRA-to-IRA transfer from one inherited IRA to another, even though distributions from an inherited IRA cannot be “rolled over.” See ¶ 4.2.02 (A), (B). Note that a transfer from a traditional IRA to a Roth IRA must meet some requirements of a “rollover,” even if it is carried out by means of an trustee-to-trustee transfer, according to Reg. § 1.408A-4 , A-1—including the rules prohibiting the rollover of an RMD (see ¶ 5.2.02 (E)) or of a distribution from an inherited IRA ( ¶ 4.2.05 (A)). 2.7 The 60-day Rollover Deadline As explained at ¶ 2.6.01 (D), one way to get assets from one retirement plan to another (or out of one plan and back in to the same plan) is the indirect or 60-day rollover. This ¶ 2.7 explains how to compute the 60-day period, how it applies to direct rollovers and lost checks, when a longer deadline may apply, and how to get a “hardship waiver” of the deadline. A rollover generally must be completed no later than “the 60th day following the day on which the distributee received the property distributed.” § 402(c)(3)(A) ; § 408(d)(3)(A) . See also ¶ 2.1.03 regarding how this period is measured. Under § 7503 , when the last day prescribed under the tax laws for performing any act falls on a weekend or holiday, the deadline is automatically extended to the next business day. The IRS does not seem to regard this provision as applying to the 60-day deadline for completing a rollover; they granted hardship waivers of the deadline ( ¶ 2.7.05 ) in several cases where the deadline fell Computation of the 60 days  An IRA-to-IRA transfer is not considered a rollover for purposes of the limit of one IRA- to-IRA rollover per 12 months ( ¶ 2.6.05 ). Rev. Rul. 78-406, 1978-2 CB 157.