IRS Clarifies IRA Rollover Rule

By Brendan Hughes0 Comments

A new tax rule clarification might change how some taxpayers manage their retirement accounts.

The rule, as stated in IRS Publication 590, has been you can do one rollover per year from one retirement account to another. People with multiple accounts interpreted the rule to mean you could perform one rollover on each account per year. A recent ruling put an end to that interpretation.

A Tax Court ruled that each taxpayer can perform one rollover per year total, no matter how many accounts he or she has.

The IRS is reinforcing that the one-year period is 365 days and starts on the day the IRA owner gets the distribution – not a calendar year. The change starts in 2015 and any prior year rollovers under the old interpretation appear to be ‘grandfathered’ instead of being penalized.

Here’s an article about the ruling, which also includes and compares the IRS Publication 590, excerpt regarding rollovers.