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What if he split the single traditional IRA into six separate IRAs? Could he then withdraw what he needs from one, then replace that amount within 60 days through a trustee-to-trustee rollover from one of his other IRAs?

By keeping within the rule that from any one IRA, there can be only one 60-day "free" withdrawal per year, the process looks like it can be repeated, creating a 360-day "free" withdrawal.

Clever! No wonder the tax code has to become ever more complex (instead of simpler) to keep up with you loop holers.

One suggestion: A trustee-to-trustee rollover from IRA B to IRA A will not satisfy the replacement of funds distributed from IRA A; he would have to take the distribution himself from IRA B and use those funds to replace the funds taken from IRA A, and so forth.

And if he's using up some of these funds to meet living expenses at each rollover, eventually this little Ponzi scheme will have to come to an end, at which time taxes and penalties will become due anyhow. And it'll come to an end earlier if any one of the paper pushers at the six different IRAs fouls up the close timing necesssary for distributions or repayments.

Seems to me easier just to take small partial premature distributions from the rollover IRA to meet expenses as need be til he finds another job, and pay up next April. But your idea should probably work for a short hiatus.


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