By Sarah Brenner, JD
Director of Retirement Education

Question: Can an IRA beneficiary do a 60-day rollover?

Answer: Only a spouse beneficiary can do a 60-day rollover from an inherited IRA if the funds are moving into an IRA in her own name. If a nonspouse beneficiary takes a distribution from an inherited IRA, those funds cannot be rolled over. A nonspouse beneficiary can move funds from one inherited IRA to another, but this must be done by a direct transfer.

Question: I am age 57 and retiring this year. I know there is an exception to the 10% early distribution penalty when someone separates from service in the year they reach age 55 or later. I also know this exception does not apply to IRAs. I understand that if I roll over some funds to the IRA, then I can’t use the exception when taking a distribution from the IRA. However, if I leave other funds in my employer plan, can I still use the exception when withdrawing those other funds?

Answer: Yes, the age 55 exception would be available for the funds left in the plan even though it would not be for the funds rolled to the IRA. However, you will need to check with the plan to see if they will allow a partial distribution with the remainder of the funds staying in plan. Some plans will not allow this.

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

https://irahelp.com/slottreport/60-day-rollovers-and-the-age-55-exception-todays-slott-report-mailbag/