By Ian Berger, JD
IRA Analyst

QUESTION:

I have a client who is age 52 and is being placed on hospice due to his battle with cancer. I understand that there is a provision in the SECURE 2.0 Act that allows individuals to withdraw from their IRAs prematurely without the 10% penalty if their condition is expected to result in death within 7 years. Can my client qualify for this exception?

ANSWER:

You are correct that SECURE 2.0 created a new exception for pre-59½ IRA withdrawals for a terminal illness. To qualify for the exception, your client must obtain a certification by his physician that describes the illness and includes a specific statement that his illness is reasonably expected to result in death in 84 months (7 years) or less. This certification must then be provided to the IRA custodian.

QUESTION:

Can an IRA owner within the 60-day window pay back multiple distributions received at different times but within the 60 days?

ANSWER:

No. Under the “once-per-year” rollover rule, if an IRA owner receives multiple distributions within any 12-month period, he can do a 60-day rollover of only one of those distributions. This rule applies to both traditional IRA-to-traditional IRA rollovers and Roth IRA-to-Roth IRA rollovers. Violating that rule could result in taxes and penalties.

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/can-my-terminally-ill-client-qualify-for-a-penalty-free-ira-withdrawal-todays-slott-report-mailbag/