1 year rollover rule | Ed Slott and Company, LLC

1 year rollover rule

I have a Roth IRA CD maturing in February, 2014 and a Traditional IRA CD maturing in March, 2014. Both of these IRA's are at the same bank. Please confirm that both of these IRA's can be rolled over to my credit union, one in February 2014 and the other in March 2014, without violating the 1 year rollover rule. Thank you.

Yes, they both can be rolled over indirectly since the 1 year limitation applies separately to each IRA account. This assumes you did not roll the funds into the expiring CDs less than one year ago. I would still move the money out by direct trustee transfer if possible to keep your indirect rollover option available. If you use an indirect rollover where the check is made out to you, then you cannot do another one from the IRA that receives the rollover for another 12 months.

Thanks Alan!  Someone just forwarded the following attachment which worries me a little bit, but I think what we discussed should still be OK.http://www.marketwatch.com/story/ira-rollover-ruling-stuns-advisers-and-savers-2014-04-04

Yes, the article explains how the IRS has abruptly changed their thinking and you can only do one rollover for all your IRA accounts rather than one for each account. But the IRS will not enforce this until 2015, so you should be OK. But from now on, move these acccounts by direct trustee transfer instead of taking a distribution and rolling it over yourself.

Would it be correct to assume that this new interpretation of one rollover per year no matter how many IRA's one holds would not apply to ROTH's?

No, it WOULD apply to all IRAs including Roth IRAs. P 63 of Pub 590 states that where not otherwise stated, the rules for traditional IRAs apply to Roth IRAs. A conversion from a TIRA to a Roth IRA is exempt from the one rollover rule.

So a secondary beneficiary of 3 separate ROTH IRA's with 3 different custodians would need to do a direct custodian-to-custodian rollover of those ROTH's if wishing to invest in their preferred mutual fund etc.  Can all 3 of those direct rollovers be made in 1 year and does the 6 month timeframe to accomplish these rollovers apply for each of these rollovers since no distribution to the beneficiary would be involved?

There is no limit on the number of direct trustee transfers that can be done. And for a non spouse beneficiary an indirect rollover has never been allowed, so the new ruling does not affect non spouse beneficiaries at all.

 

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