mochachreme: IRA Rollover to avoid taxation and penalty. Does the rollover have to equal the distrubution amount?
I received a check from a defined benefit plan upon switching jobs. I want to reinvest it before the 60 days to get rollover credit, but I don’t want to deposit the entire amount. Can I get tax credit for a partial reinvestment or does it have to be the entire thing in order to count?
I received a 1099 R and the taxable portion was very low.
Answers and Views:
Answer by 🙂
If you don’t roll-over the entire amount, you will have to pay interest and penalties on the amount that you don’t roll-over.
You must roll over the entire amount. If you did roll over only a partial amount the excess would be taxed and maybe even penalized depending on your plan.Answer by Vic
Roll the entire amount! Otherwise what you keep will be counted as income – BUT – the taxation on it will be increased because it was previously tax deferred and intended to be retirement savings. This is the benefit and the whole idea behind a retirement account.