Tag Archives: IRA

Transition Guidance Issued for Limit on IRA Rollovers

The IRS recently released clarifying guidance on the one-per-year limit on tax-free rollovers between IRAs.

Several months ago, the Tax Court stunned practitioners and taxpayers alike by holding in the Bobrow case that an individual could not make more than one nontaxable 60-day rollover within each one-year period, even if the rollovers involved different IRAs. Publication 590, Individual Retirement Accounts (IRAs), provided that the one-rollover-per year was applied on an IRA by IRA basis, not on an aggregate IRA basis. This contradiction left many in limbo for a short period of time. Somewhat surprisingly, the IRS quickly indicated that it would ignore the longstanding instructions in Publication 590 and follow the interpretation of the Court.

The new announcement is designed to bridge the gap between the old rules and the new rules for 2014/2015. The aggregate rule will apply to distributions from different IRAs after 2014. For 2015, a 2014 distribution that was rolled over is disregarded for purposes of determining whether a 2015

Distribution can be rolled over, provided that the 2015 distribution is from a different IRA that neither made nor received the 2014 distribution.

As the IRS has indicated repeatedly, these new rules do not impact trustee-to-trustee transfers, rollovers between qualified plans and IRAs, and Roth conversions.

Please contact Mark Flanagan of Aronson’s compensation and benefits practice at 301.231.6257 for more information on these new rules.

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