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Indirect Rollover

I am planning to send the full amount of cash from a sep ira (A) to a solo 401k (C). 
The bulk of the money will go from bank A to bank C. But I (B) would like to use some funds for 60 days, and I am a bit confused. 

Let's supposed I will direct current bank A to transfer $10,000 to my personal bank B. The balance will go straight to bank C  (new solo 401k). 

From what I read on the internet, It looks that the bank will send me $8,000. 
In order to avoid any penalty or taxation, I need to return the $8,000 + $2,000 to avoid the mess. 
So my question: will the originating bank A give me back the $2,000 or it's money that will be kept as tax and sent to the Taxman? If they give back to Ira bank (A), it's like a contribution to retirement (2k withheld +new 2K)

And a complication. How Bank A will certify that I actually added the 2,000 to bank C?

Thank you so much!

 
The assumption is that we follow the rules to avoid early distribution (which is basically the 60 days). 

 

Best answer 01-09-2019 11:11 AM

Accepted Solutions
Established Community Backer ***

Re: Indirect Rollover

Your $2k is Required Withholding. You will get 1099-R from the entity making the withdrawal, and a 5498 from the entity getting the deposit. The Feds have your $2k until you prove the right to claim it.

 

You want to read about it here:

https://www.irs.gov/forms-pubs/about-publication-590-b

 

Do your own research, if you intend to take these risks.

2 REPLIES
Established Community Backer ***

Re: Indirect Rollover

You really need to talk to the bank that receives the 10K

and maybe to a tax accountant

Established Community Backer ***

Re: Indirect Rollover

Your $2k is Required Withholding. You will get 1099-R from the entity making the withdrawal, and a 5498 from the entity getting the deposit. The Feds have your $2k until you prove the right to claim it.

 

You want to read about it here:

https://www.irs.gov/forms-pubs/about-publication-590-b

 

Do your own research, if you intend to take these risks.