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I may have messed up: rollover pension to IRA, but already rolled over 401k to IRA a few months ago

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Hi all. My wife recently left her job to be a SAHM for our daughter, and is doing some contract work on the side at home. Because of this decision, she had a 401k that we rolled over into a Traditional IRA, which was opened specifically for these funds. I also transferred her old IRA from Scottrade to TD Ameritrade to consolidate the accounts. All is well and good, but then a surprise letter in the mail a couple months after she left her job showed up. This letter was notifying her of her pension balance and that we had options, such as a lump sum check (less 20% withholding, etc) or a lump sum rollover or wait until she's 65 to get $300/month (woohoo). We opted to just take the funds now and roll them over into her established IRA earlier in the year. However, since this type of situation doesn't happen often to me (first time, in fact), I totally forgot about the one rollover per 12 month rule for IRAs. I am assuming that the 401k rollover and pension rollover both qualify under this rule. So now I have a $9300 check sitting here, made out to TD Ameritrade FBO my wife, with no taxes withheld, and am in a bit of a pickle.

Any help is much appreciated. I wish I did more research before making the decision to do a rollover. My thoughts on options are below:

1) open a deposit account at TD Ameritrade and deposit the funds, taking the tax hit and penalty hit (least desirable option, for obvious reasons)
2) somehow ask the pension administrator if there is an alternative (I doubt it)
3) rollover the funds into the IRA anyway, and pay some sort of tax hit (this is probably the least burdensome, and probably the cheapest option, I think?)


tl;dr: wife left job early this year, rolled over 401k into Trad IRA, got notification that she had a cash balance in her pension, decided to roll that over into an IRA as well, screwed

ETA: am I just worrying for no reason? Per IRS website:
The one-per year limit does not apply to:

  • rollovers from traditional IRAs to Roth IRAs (conversions)
  • trustee-to-trustee transfers to another IRA
  • IRA-to-plan rollovers
  • plan-to-IRA rollovers
  • plan-to-plan rollovers

Is the pension rollover a plan-to-IRA rollover? Also, was the 401k rollover a plan-to-IRA rollover?

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Was the 401(k) rollover and transfer from Scottrade also done with checks to you made payable to her IRA or were they direct Trustee to Trustee (the providers sent $ directly to TD)?  Regardless, what you've described from the pension & the 401(k) would be plan to IRA rollovers, to which the one rollover rules do not apply.  The IRA transfer would count as her 1 for the year (unless Scottrade sent the check to her TD IRA directly (Trustee to Trustee transfer).

401k was sent direct to TD. Scottrade was a transfer, but still ST->TD directly. We never saw a check, only had to mail some forms in for each transaction.

jaytrader said:   401k was sent direct to TD. Scottrade was a transfer, but still ST->TD directly. We never saw a check, only had to mail some forms in for each transaction.
  You're in good shape.  Trustee to Trustee transfers & plan to IRA rollovers do not count.  The spirit of the law is to keep people from abusing "borrowing" money for 60 days from their IRA & redepositing over & over again.

I see, thanks. We did get the check, similar to an Indirect Rollover, for this pension situation. However, it's intended to go right to TD, and not the typical 60-day thing.

As raringvt said, your pension and 401k to IRA should not count towards the rule. The checks were made payable to "TD Ameritrade FBO my wife" and your wife never had access to the funds. You should be good.

Just mail out the check from pension plan to TDA for deposit into wife's IRA account.


It would not have mattered if the 401k and Pension rollovers were made payable to the participant, cashed and then rolled over within 60 days.

The once per 12 month period restriction only applies to IRA -> IRA rollovers. You can do as many IRA -> IRA trustee transfers and indirect rollovers from pensions, qualified defined contribution plans and Roth conversions without a problem.

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