Posted by James M. Carlson
May
30
2017
A person generally cannot make more than one rollover from the same IRA
within a 1-year period. A person also cannot make a rollover during this
1-year period from the IRA to which the distribution was rolled over.
Beginning after January 1, 2015, one can make only one rollover from an
IRA to another (or the same) IRA in any 12- month period, regardless of
the number of IRAs one owns.
The one-per year limit does not apply to:
-
rollovers from traditional IRAs to Roth IRAs (conversions
-
trustee-to-trustee transfers to another IR
-
IRA-to-plan rollover
-
plan-to-IRA rollover
-
plan-to-plan rollovers
Once this rule takes effect, the tax consequences are:
-
one must include in gross income any previouslyuntaxed amounts
distributed from an IRA if you made an IRA-to-IRA rollover (other than
a rollover from a traditional IRA to a Roth IRA) in the preceding 12
months, an
-
one may be subject to the 10% early withdrawal tax on the amount you
include in gross income.
Categories:
Posted by James M. Carlson
May
08
2017
There are seven (7) IRA rollover rules:
-
An RMD is never eligible to be rolled over
-
A person is authorized to rollover only one distribution within a 12
month period
-
The rollover must be completed within 60 days
-
An inherited IRA (non-spouse beneficiary) is never eligible to
roll over a distribution from an inherited IRA
-
5. If property is distributed (and not cash), such property must be a
rollover The property cannot be sold and the proceeds rollover over as
is the case when property is distributed from a qualified plan
-
SIMPLE IRA funds may be rolled over into a traditional IRA, SEP-IRA or
a 401(k) or vice versa only if the individual has met the 2 year
requirement
-
Roth IRA funds can only be rolled over into the same or a different
Roth IRA.
A person who fails to comply with all of the above 7 rules is ineligible
to make a rollover contribution.
The IRS has been granted the authority by a 2001 tax law to grant relief
to someone who has missed the 60 day rule because he or she incurred
some difficulty or hardship and it would be unjust, or inequitable for
the IRS to not waive the 60 day rule. Waive means the IRS creates a new
60 day period for the individual to complete the rollover.
The IRS' position is - it does not have the statutory authority to grant
rollover relief to a person who fails to comply with any of the other
rollover rules.
The IRS can't grant relief to any person who has taken multiple IRA
distributions during a twelve month and makes an ineligible rollover
contribution.
The IRS can't grant relief to a nonspouse beneficiary who was paid a
distribution by an IRA trustee. The IRS can't grant relief and allow
someone to roll over a required distribution.
The IRS can't grant relief if a person receives an in-kind distribution
from his or her IRA, sells the asset, and then impermissibly rolls over
the sales proceeds. If a distribution is ineligible to be rolled over
but it is contributed as a rollover, such distribution will need to be
included in the individual's taxable income and it will be an excess
contribution subject to the excess contribution rules until corrected by
withdrawal.
Categories: Traditional IRAs