Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
<<Thanks for the detailed answer; I really appreciate it.>>

My pleasure...

<<Now, let's say that despite all my efforts the new broker fails to open the account on time. Would there be a problem with opening another IRA with some other company on the last day of the 60 day period (I have the funds to do this).>>

I'm not sure that I understand what you are asking. If you don't think that Broker #1 will do the job, tell him to STOP right now, and immediately go to broker #2 and make sure that the 60 day limitation is met. If you have the funds to make that happen, it's certainly something that you should consider.

IRS doesn't care where the money comes from to make the rollover (but I'm guesing that robbing a bank would be out of the question...at least with local law enforcement authorities). But the LAST thing that you want would be TWO rollovers...one with Broker #1 and one with Broker #2. You'd avoid the tax on a failed rollover, but you'd have another mess on your hands.

<< In the worst case I would end up with two IRA's, one of which would be funded with money that would not be eligible for contribution to an IRA. If this worst case scenario were to occur, what would the tax consequences be when I do the necessary revocation of one of the IRA's? And is revocation of an IRA an easy process?>>

It's not THAT big of a deal. But it does involve some paperwork, it'll complicate your tax return, it'll likely make your return more audit prone (because of the multiple distributions out of the IRA account). So for those reasons, why screw around with it. Just tell Broker #1 to fly a kite NOW, and move to Broker #2.

But...if for some reason you simply can't do that, you are much better off having two rollover accounts (and having to clean up that mess) than to have NO rollover accounts opened within the 60 day period.

TMF Taxes
Roy
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement