Understanding 60-day IRA rollover limitations across multiple accounts

The bad news is your financial advisor is correct about the "one rollover per 12-month period" rule. This rule applies regardless of how many IRA accounts you have - it's per person, not per account. This rule was clarified by the IRS after the Bobrow v. Commissioner Tax Court case in 2014. What's important to understand is that the rule applies to all your traditional IRAs collectively (including SEP and SIMPLE IRAs). So unfortunately, only one of your withdrawals will qualify for the tax-free 60-day rollover treatment. The others will be considered distributions subject to income tax and potentially the 10% early withdrawal penalty if you're under 59½. For your specific questions: 1. Returning the funds now won't help if you've already exceeded the 60-day window for those distributions. The 60-day clock starts on the date you received the distributions. 2. Converting to Roth wouldn't solve this particular issue. A Roth conversion is different from a rollover, and while you can do multiple Roth conversions in a year, that doesn't change the one-rollover rule for the initial distributions. If you're concerned about minimizing the tax impact, you might want to consider whether any exceptions to the early withdrawal penalty might apply to your situation, such as first-time homebuyer exception (limited to $10,000 lifetime) or financial hardship provisions.

After dealing with a similar nightmare with retirement distributions, I found an amazing tool called taxr.ai (https://taxr.ai) that saved me tons of headaches. It analyzed my withdrawal documents and flagged the exact issue you're dealing with before I made the same mistake with multiple accounts. The system actually showed me the IRS guidance about the one-rollover limitation and explained my options better than my financial advisor did. It even helped me understand which specific retirement distribution would be best to designate as my 60-day rollover to minimize taxes based on my total financial picture. I'm not usually one to recommend services, but this literally saved me thousands in potential penalties by catching this exact issue before I proceeded with multiple rollovers.

Just wanted to follow up on my skeptical comment earlier. I decided to give taxr.ai a try with my retirement accounts situation and I'm genuinely impressed. I uploaded statements from my three different IRA accounts and it immediately flagged potential rollover issues I hadn't considered. The analysis broke down exactly how the "once per 12-month period" rule applied to my accounts and showed me which transactions would trigger penalties. It even showed me the specific IRS guidance documents so I could verify everything myself. This saved me from making an expensive mistake I was about to make with some 401k funds. For anyone dealing with retirement account confusion like the original poster, it's definitely worth checking out. Wish I'd known about this before my last tax season headache!

I went through something similar with trying to reach the IRS for clarification on the 60-day rollover rules. Spent literally DAYS trying to get through on their phone lines. Finally found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) and was super skeptical but desperate. They actually got me connected to an IRS agent in about 15 minutes when I'd been trying for days. The agent confirmed exactly what the first commenter said about the one-rollover rule, but also helped me understand my options for requesting a waiver of the 60-day requirement in certain hardship situations. Turns out there's Revenue Procedure 2020-46 that lets you self-certify a late rollover in some cases if you had a good reason for missing the deadline. The IRS agent explained the whole process to me. Never would have known this without actually speaking to someone.

I need to eat my words from my skeptical comment yesterday. After waiting on hold with the IRS for 3+ hours and getting disconnected TWICE, I broke down and tried Claimyr out of pure frustration. Got connected to an IRS agent in about 20 minutes. The agent was actually super helpful about my rollover situation (similar to the original poster's issue). They walked me through Form 5329 for reporting the excess distributions and explained some exceptions I might qualify for. The service isn't free, but considering I was about to lose a day's work sitting on hold, it was worth every penny. For anyone dealing with these complex IRA rollover issues where you really need to speak to a human at the IRS, this is definitely the way to go. Sorry for being a doubter.

One option nobody has mentioned - if you're using the funds for a home purchase, see if you qualify for the "first-time homebuyer" exception from the 10% early withdrawal penalty (still pay income tax though). The IRS considers you a "first-time homebuyer" if you haven't owned a principal residence in the previous 2 years. Maximum is $10,000 lifetime though. Also, depending on your age and circumstances, check if you qualify for any hardship distributions or Rule 72(t) distributions, which allow penalty-free early withdrawals under certain conditions.

Something to consider - you mentioned these IRAs were previously rolled from old 401ks. If any of those rollovers were recent (within the last 12 months), that could complicate things further since you're limited to one indirect rollover per 12-month period across ALL your IRAs. Also, did you have any Roth contributions within those accounts? Those could potentially be withdrawn without penalty (though there are ordering rules).

Dylan, I feel for you on this situation - it's a common misconception that many folks have about IRA rollovers. Just wanted to add a couple of points that might help minimize the damage: 1. Make sure you designate your LARGEST withdrawal as the one qualifying for the 60-day rollover treatment. This will minimize the taxable income from the distributions that don't qualify. 2. If you're still within the 60-day window for any of the distributions, complete that rollover ASAP. The clock started ticking from the date you received each distribution. 3. Consider whether you might qualify for any penalty exceptions on the taxable distributions. While the first-time homebuyer exception won't work for you, there might be other hardship exceptions depending on your specific circumstances. 4. When you file your taxes, you'll want to work with a tax professional who can help you properly report this on Form 8606 (for any after-tax basis you might have) and Form 5329 (to calculate any penalties and claim exceptions). The silver lining is that this is primarily a tax issue, not a permanent financial disaster. You'll owe taxes and potentially penalties, but you still have your house and the withdrawn funds served their purpose. Expensive lesson, but you're not alone in making this mistake!

Dylan, this is such a frustrating situation but you're definitely not alone in making this mistake. The IRS rollover rules are genuinely confusing, and even some financial professionals don't fully understand them. One thing I wanted to add that might be helpful - since you mentioned you're preparing to sell your current home, be mindful of how the timing of these distributions and your home sale might interact tax-wise. If you're going to have a significant capital gain from the home sale, you could end up in a higher tax bracket for the year, which would make the tax hit from these distributions even more painful. Also, I'd strongly recommend getting all the documentation together now - dates of each distribution, amounts, which IRA custodians they came from, etc. You'll need this for Form 8606 and Form 5329 when you file your taxes. The IRS can be pretty particular about the paperwork on retirement account distributions. The good news is that while this is an expensive lesson, you're not the first person to learn it the hard way. At least you caught the issue before making any additional moves that could have made things worse. Sometimes the best financial education comes from our mistakes, unfortunately!