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IRA Rollover Limits

A new rule limits the number of IRA rollovers that can be made in any one year period to just one rollover.

Recently, the Tax Court held that the limit applies not to each separate IRA an individual may own, but to all of his or her IRAs. This is a contradiction to proposed IRS regulations and tax publications that state that the limit applies to each IRA an individual owns. Therefore, an individual with three IRAs could make three rollovers in a one year period under the IRS guidance, but only one under the Tax Court decision.

After considering the matter, the IRS announced that it will adopt the more restrictive view of the Tax Court. However, the new rule won't apply to any rollover that involves a distribution occurring before 2015. The IRS emphasized that an IRA owner will continue to be able to transfer funds from one IRA trustee directly to another as frequently as desired. Such transfers are not rollovers and thus are not subject to the limit.

Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein

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