Lump sum pension rollover to IRA

I had planned on getting the check sometime next week, and taking it to local Fidelity office for deposit etc. (Check is being sent to me with Fidelity's name and FBO info etc)

I just checked my on-line account @ Motorola ( actually AON Hewitt), and it says "effective payout date" is now Dec 17, but "Payments are mailed on the 1st of month".

If in fact the check is dated in, and deposited in, Jan 2015, does this distribution & rollover get reported for Tax Year 2015, instead of 2014 ? I assume yes.

What if check is dated Dec 2014, but comes to late to get to Fidelity until early Jan 2015 ? Can the "60 days" overlap the end of the year OK ? And it is then reported for TY 2015.

Thanks for any help. ============ Why didn't you do a trustee-to-trustee transfer?

Regardless, you have 60 days from the date the money is withdrawn from the account to complete the rollover. Year end overlap is fine.

For purposes of the 1099-R, if they don't mail the check until January 2015, then you should receive NO form for 2014. To be reportable, it has to be made available to you.

I worked for a company spun off by Motorola as well. When they first went portable pension option (2004?) I took portable and, as I recall, they mailed me the check, payable to Charles Schwab, but it came to me to drive over to deposit it. Trustee-to-trustee wasn't an option.

When the former custodian writes the check payable to the custodian, it is treated as if it were a direct trustee to trustee transfer.

Same here. Moto/AON Hewitt would only send check direct to me, but addressed as Fidelity, FBO my name, acct# etc.

Have since studied Pub 590 in more detail, and appears I'll be OK as along as check was cut and mailed on 19th.

Thanks for response

Was on 3 way call with Fidelity and AON Hewitt, and they would not send check direct to Fidelity, even though the packet of info they sent out indicate the would/could.

Oh well.......

Thanks

When the former custodian writes the check payable to the custodian, it is treated as if it were a direct trustee to trustee transfer. ============ I see the logic in your conclusion, but have to disagree with that. A direct trustee-to-trustee transfer never passes through the taxpayer's hands. Here, the check was received by the individual and passed through his hands, even though it were paid to the order of the new trustee.

This seems like hair-splitting to me. Yes, the taxpayer had the physical check, but it wasn't made out to him, and he couldn't cash it. By this logic, if the first trustee had mailed the check to the second, that's not a direct transfer either, since it passed through the hands of the postman.

It is not a trustee-to-trustee transfer. It is called a direct rollover and there is no 60 day requirement. Direct rollovers are very typical when going from a qualified plan to an IRA. It is a tax-free transfer of retirement assets. You are allowed more than one direct rollover each year.... just like trustee-to-trustee transfers.

responding to

,Scott V. wrote: Got my check today and even though I asked them to send the check to Scottrade and gave them the account info, they sent the check to me. That wouldn't be bad except them made the check out to me and withheld 20%!!

Saying I am a little angry is an HUGE understatement. The real question is can they fix this by the end of the year so we don't have this amount added to our 2014 income. I wouldn't want to be a person taking phone calls tomorrow from x Motorola employees who got their pension checks today.

This seems like hair-splitting to me. Yes, the taxpayer had the physical check, but it wasn't made out to him, and he couldn't cash it. By this logic, if the first trustee had mailed the check to the second, that's not a direct transfer either, since it passed through the hands of the postman. ========== The statutory language of IRC Section 408 makes it clear: If the taxpayer touches the funds, even if it's to hand the check to a successor trustee, it's not a direct transfer.

Exactly what language in section 408 says that? I don't see anything in that statute talking about direct transfers. But the definition of rollover starts out say saying in applies to an

"amount paid or distributed out of an individual retirement account or individual retirement annuity to the individual for whose benefit the account or annuity is maintained"

If a check made out by one trustee to another is delivered to the taxpayer, it is not "paid or distributed" to him.

Per my first reply..... It is a direct rollover and there is no 60 day requirement. Direct rollovers are treated the same as trustee-to-trustee transfers. Direct rollovers are typical of qualified plan to IRA rollovers. The plan administrator cuts the check made out to the IRA and delivers the check to the IRA owner. This is not the same as distributing the funds to the owner by making the check out to the individual owner.

Per my first reply..... It is a direct rollover and there is no 60 day requirement. Direct rollovers are treated the same as trustee-to-trustee transfers. Direct rollovers are typical of qualified plan to IRA rollovers. The plan administrator cuts the check made out to the IRA and delivers the check to the IRA owner. This is not the same as distributing the funds to the owner by making the check out to the individual owner. =========In a direct rollover, the former trustee delivers the check to the NEW trustee, not the IRA beneficiary.

See where it says "received by an individual" in section 408(d)(3)(B), and similarly 408(d)(3)(A)(i)? That does not require that the check be negotiable by the individual.

Generally the trustee will deliver the check to someone who delivers the check to someone who delivers the check to the new trustee. I don't see why the beneficiary can't be one of those intermediaries.

The funds can't be received by the individual if he can't negotiate the check. He receives the check, sure. But not the funds.

In the two places in the statute that use the phrase you quote, left something out. It refers to "any amount received by an individual...." Someone can't receive an "amount" of money if all he has is bare custody of a check he can't cash.

Also, those two references in the statute only deal with what is or is not a rollover. As far as what is taxable if the rules aren't met, the statue says that only applies to an "amount paid or distributed out of an individual retirement plan...." Handing someone a check he can't negotiate is not a payment or a distribution.

408(d)(3) is irrelevant. It deals with distributions from an IRA. We are discussing rollovers from a qualified plan to an IRA. You have the wrong section of the code. The rules are in either the regs or a notice relating to section 402.

The IRS website also explains the difference between the 60 day rollover and a direct rollover. The 60 day rollover is a distribution from the plan in the form of a check made out to you and it is subject to mandatory 20% withholding. A direct rollover is in the form of a check made out to then plan and is not subject to withholding.