Trustee to Trustee Transfer
Does a trustee to trustee transfer count as a rollover which you can do once every year and hold the money for up to 60 days? I would think you can do a trustee to trustee transfer every month if you wanted, right?
Bernie
Does a trustee to trustee transfer count as a rollover which you can do once every year and hold the money for up to 60 days? I would think you can do a trustee to trustee transfer every month if you wanted, right?
Bernie
Permalink Submitted by Alan Spross on Thu, 2009-06-18 02:12
Right. There is no limit on the number of direct trustee transfers. IRA owner cannot use the money because any check that they receive must be made out to the receiving custodian to qualify for a non reported transfer. Since these checks cannot be rolled over, the 60 day rule does not apply. The issuing custodian may stop payment or take other action if these checks are not cashed in a certain period of time, and losing them is not unheard of.
Permalink Submitted by [email protected] on Thu, 2009-07-16 17:36
Alan – What is your authoritative source for unlimited direct trustee / non-reported tranfers? Thanks, Adam
Permalink Submitted by Alan Spross on Thu, 2009-07-16 19:10
Adam,
This is rooted in IRS Sec 408(d)3 where a rollover is defined as a distribution paid to the IRA owner. The one rollover limit applies to these rollovers. Conversely, a Trustee to Trustee Transfer is made directly to another IRA, and is not made payable to the IRA owner, and is therefore non reportable according to the Inst for Form 1099R.
The IRS code does not specifically say that transfers DO NOT count as rollovers, but since they are not distributions or treated like distributions, the interpretation that they are not rollovers would automatically mean that the rollover limit would not apply since it only applies to rollovers.
To tie this all together, here is a link to Denise Appleby’s Retirement Dictionery for T to T transfers. Toward the bottom you can also click on the “rollover” which transfers to that definition. These pages include references and links to IRS Pubs or code sections.
While I have never seen the concept of unlimited transfers questioned, this is like many other issues where the tax code does not specify what does NOT count, only what does count. Therefore, I am not aware of any code provision that clearly states that the number of transfers is unlimited, because the code only limits rollovers. Accordingly, one must identify exactly what qualifies as a transfer and what is not a transfer. The most basic characteristic of a transfer is that the IRA owner cannot cash the check and therefore that check is NOT a distribution. To have a rollover, you first must have a distribution.
http://www.retirementdictionary.com/definitions/trusteetotrusteetransfer
Permalink Submitted by [email protected] on Thu, 2009-07-16 22:54
Alan – Thanks for your explanation and assistance in right direction.
Additional authoritative sources I have found:
Rev Ruling 78-406
Pub 590, p.23