Lifestyle in Retirement

2014 IRA Rollovers

An IRA Rollover does not involve current income tax deductions, but rather is a method through which tax favored retirement plan assets can be transferred from one plan to another plan while maintaining their tax favored status.

What Types of Rollovers Are Permitted in 2014?

Eligible Plans

  • Eligible rollover distributions from qualified plans, 403(b) annuities and Section 457 plans may be rolled over to any of the other types of plans that will accept such rollovers. A Section 457 governmental plan must separately account for funds received from qualified plans, 403(b) annuities or IRAs, or it may not accept such funds.

Spousal Rollovers

  • Distributions from a qualified plan paid to the surviving spouse of a deceased participant may be rolled over within 60 days to another qualified plan, a Section 403(b) annuity, a regular IRA or a Section 457 plan.

Rollover Maximum

  • The maximum amount generally eligible for rollover is the amount that would be included in income if not rolled over. There is, however, an exception…after-tax employee contributions distributed from a qualified plan can be rolled over to a regular IRA or to a defined contribution plan in a direct trustee-to-trustee transfer, if separately accounted for.

Roth IRA Rollovers

  • Participants in traditional (non-Roth) qualified plans can roll plan distributions over to a Roth IRA. The rollover amount, less any after-tax contributions, is included in gross income in the year of the distribution.

Roth Accounts

  • Participants who receive a distribution from a Roth account in a qualified plan need to roll that Roth account over into a Roth IRA in order to maintain the income tax free character of Roth distributions.

Hardship Exception

  • The Act gave the Secretary of the Treasury the authority to waive the 60-day rule for rollovers where failure to comply is due to casualty, disaster or events beyond the reasonable control of the taxpayer.

Can Funds Be Transferred Between Traditional IRAs and Between Roth IRAs?

Yes, funds can be moved from a traditional IRA to another traditional IRA or from a Roth IRA to another Roth IRA without any taxes or penalty, assuming certain requirements are met:

  • The trustee of the existing IRA either transfers the funds directly to the trustee of the receiving IRA; or
  • The funds in the existing IRA are distributed to you and you roll them over to the receiving IRA within 60 days of receiving the distribution.
  • Only one rollover from a traditional IRA to another traditional IRA, or from a Roth IRA to another Roth IRA can be made in any one-year period.

 Can Funds Be Transferred From a Traditional IRA to a Roth IRA?

  • Yes. All taxpayers have the option of rolling funds over from traditional qualified plans into a Roth IRA. The conversion income must be recognized in the year the rollover or conversion takes place.

 Can Funds Be Transferred From a Roth IRA to a Traditional IRA?

  • No, funds cannot be moved from a Roth IRA to a traditional IRA.