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New Rule Effective in 2015-One IRA Rollover Permitted Per Year

September 22, 2014

The IRS is following the Tax Court ruling that the limit of one rollover per year applies on an aggregate basis and not on an IRA-by-IRA basis. The IRS withdrew a 1981 proposed regulation and announced that the new ruling will not apply to any rollover that involves a distribution that occurs before January 1, 2015.

Sec. 408(d)(3)(A)(i) permits a tax-free rollover of funds in a taxpayer’s IRA as long as the amount distributed to the taxpayer is paid into an IRA for the taxpayer’s benefit within 60 days, subject to the one-rollover-per-year limit of Sec. 408(d)(3)(B). The Tax Court in Bobrow, T.C. Memo. 2014-21 held that the limit applies to all of a taxpayer’s IRAs, in the aggregate, and that the petitioner in the case, who had made more than one rollover from more than one IRA during the tax year, was taxable on the full amount of the second rollover.

An IRA owner’s ability to transfer funds from one IRA trustee to another (as opposed to the taxpayers getting a check and making the transfer himself or herself) is not considered a rollover and, therefore, is not subject to the one-a-year limit.

If you have any questions, please discuss them with your ATA representative.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein.  Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities.  This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

 

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