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November 24, 2014

IRS Issues Guidance on one IRA-to-IRA Rollover Rule- Quick and Dirty Summary

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The IRS issued Announcement 2014-32, in which they provide additional guidance on the one-per-year limitation on IRA-to-IRA rollovers. This announcement is a follow-up to Announcement 2014-15, in which the IRS addressed said one-rollover-per-year limitation (see Hot off the Presses: IRA Rollover Rule Changes Coming.)

The following is a high level summary of Announcement 2014-32:

  • Distributions from IRAs are usually considered ordinary income.
  • An exception applies to amounts that are proper rolled over. Generally, rollovers must be completed within 60-days of receipt. Such rollovers are commonly referred to as 60-day rollovers.
  • 60-day rollovers between IRAs can be made only once during a 12-month period.
  • In Bobrow v. Commissioner, T.C. Memo. 2014-21, the Tax Court held that the one-rollover-per-year limitation applies on an aggregate basis. This contradicted IRS Publication 590 and IRS proposed regulation, which provided that such a limitation applied on a per-IRA basis.
  • In Announcement 2014-15, the IRS stated that they will revise IRS Publication 590 to reflect the Tax Court’s interpretation of the Internal Revenue Code, and withdraw their proposed regulation. The proposed regulation has since been withdrawn.
  • The IRS will apply the Tax Court’s interpretation effective for distributions that occur after December 31, 2014
  • In Announcement 2014-32, the IRS provided that the all of an individual’s Traditional IRAs, SEP IRAs, SIMPLE IRAs and Roth IRAs are aggregated, for purposes of determining when the one-per-year rollover rule applies.
  • Announcement 2014-32 also provides a transitional rule for the 12-month period that starts in 2014 and ends in 2015.

Details will be provided in the January to March 2015 issue of The IRA Authority!

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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