Exceptions to the Once-Per-Year IRA Rollover Rule | Ed Slott and Company, LLC

Exceptions to the Once-Per-Year IRA Rollover Rule

By Joe Cicchinelli, IRA Technical Expert

Follow Me on Twitter: @JoeCiccEdSlott

There is a one-rollover-per-year rule that applies to IRA distributions. IRA-to-IRA or Roth IRA-to-Roth IRA rollovers are subject to the once-per-year rule. The account owner can only rollover IRA funds once every 12 months. The 12-month period is a full 12 months.

For example, if you received your IRA distribution in November that you rolled over within 60 days, you are not eligible to do another rollover from that IRA until the following November. The 12 months starts when you receive the IRA distribution, not when the distribution is actually rolled over, for example 60 days later.

In 2014, this once-per-year rule applies to each of your IRAs separately. For example, let’s say you have two different IRAs with two different financial institutions; you can roll over one distribution from each of them. But this rule will change next year.

On January 28, 2014, The Tax Court ruled in the Bobrow case that the once-per-year rollover rule applies to all of a person’s IRAs collectively, not to each of his IRA accounts separately. Based on the Court’s ruling, the IRS announced in March 2014 that this rule change will not start until 2015.

Direct transfers between IRAs (where you don’t control the funds) are not subject to the once-per-year limit and can be done an unlimited number of times.

While the once-per-year rollover rule applies to most IRA-to-IRA or Roth IRA-to-Roth IRA rollovers, there are some exceptions. The three types of rollovers listed below are not subject to the once-per-year rule. Like direct transfers, they can be done an unlimited number of times within a year:

  1. Roth conversions – IRA funds can be converted to a Roth IRA as many times as you like during the year.
  2. Rollovers from employer plans to IRAs – Distributions from your employer retirement plans, such as a 401(k) aren’t subject to the once-per-year rollover limit.
  3. Rollovers from IRAs to employer plans – Some employer retirement plans allow you to roll over your pre-tax IRA funds into your company’s retirement plan. If that’s the case, you can roll over as a many distributions as you like.

     

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