Reporting a Rollover Into Your Self-Directed IRA

Self-directed or not, any Rollover of a Traditional IRA into another Traditional IRA must be reported to the IRS through your annual Form 1040 tax form.

BUT, for those of you who have read any of my past blogs or if your IRA IQ is up to par, the question you may have is “why wouldn’t someone just do a TRANSFER of a Traditional IRA into another Traditional IRA”….and, you would be correct. Logically speaking, unless one wants to or needs to, I am not sure why anyone would choose a Rollover over a Transfer. Remember, Transfers (e.g., “like to like”) can be done as often as one wishes, where a Rollover can only occur once 12 months. Further, since the Transfer is “like to like” between custodians, there is no reporting of the Transfer to the IRS by the IRA account holder. This is done by the custodians with a Form 1099 and Form 5498. It is simple.

BUT, in the case where someone does a Rollover from one Traditional IRA to another Traditional IRA, how is the Rollover reported to the IRS on Form 1040?

You will enter the total amount of the distribution on Form 1040, line 15a. If the total amount on Form 1040, line 15a was rolled over, you will enter zero (0) on Form 1040, line 15b. If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040. In simple language, if you rolled over $100,000 into the next Traditional IRA, you would report $100,000 on Line 15a and zero (0) on Line 15b….again, that is assuming that the $100,000 was the total amount originally distributed from the first IRA.

Again, unless you need or want (e.g., moving the funds from one IRA to another IRA for expediently) to do a Rollover, most people should find it much simpler doing a Transfer. But, now you know how to report any Rollover of a Traditional IRA to another Traditional IRA.

Next post we will address how to report a Rollover of an IRA into a 401K or any other Qualified Plan into a 401K.

This entry was posted in 401(k)'s & IRA's on by .

About John Park

John Park is a facilitator for self-directed IRAs and 401Ks and founder of PGI Agency, Inc. which is host to PGI SelfDirected. Prior to that, John maintained his own insurance agency and also worked in intercollegiate athletics (Arizona State University, Big Ten Conference Office). For over 6 years, PGI has established both self-directed IRA and 401K accounts so that individuals can take control of their retirement assets and invest in both Traditional and Non-Traditional (e.g., real estate) assets. John believes that most people should fully explore having FULL control of their retirement funds and be the steward of their own money.

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