Income Taxes

IRS Pulls Rug From IRA Rollovers

In a recent United States Tax Court case, Bobrow v Commissioner, the Tax Court ruled that all IRAs of a taxpayer should be looked at in aggregate when it comes to the one-rollover-per-year rule. Prior to this ruling it was widely accepted, as well as published in IRS publication 590, that the one-rollover-per-year applied to each IRA independently.

Following the court decision the IRS issued Announcement 2014-15, stating their intention of enforcing the new aggregated one-rollover-per-year rule. However, they are allowing a grace period until January 1, 2015 before enforcement will begin.
As a reminder, the one-rollover-per-year rule applies only to indirect (60-day) IRA to IRA rollovers. Information on the IRS website implies that the limit will apply separately to indirect Roth IRA to Roth IRA rollovers. It appears that traditional, SEP and SIMPLE IRAs would be aggregated for purposes of the rule.

Please also keep in mind:

  • There is no limit on the number of rollovers between an IRA and a qualified plan.
  • There is no limit on the number of IRA to IRA transfers.
  • It appears that there is no limit on the number of indirect traditional IRA to Roth IRA conversions.