Ruling changes allowed IRA rollovers
Individuals with multiple individual retirement accounts, or IRAs, will have to be more careful now when moving money between their traditional IRAs.
Starting as early as Jan. 1, 2015, anyone with an IRA will be allowed to make only one non-taxable rollover in a 12-month period to another or the same IRA, no matter how many IRAs a taxpayer has.
The U.S. Tax Court made the new rollover ruling earlier this year, but the IRS is waiting until at least Jan. 1, 2015, to implement the ruling to give IRA owners and trustees time to adjust, according to an IRS announcement. The tax court ruling changes long-standing guidelines in the IRS Publication 590 that said a rollover from one IRA to another would not affect a rollover involving other IRAs of the same individual.
The ruling doesn’t affect trustee-to-trustee transfers, as those transfers don’t count as a rollover because they don’t pass through a taxpayer’s hands. A rollover from a qualified retirement plan, such as a 401K plan, also doesn’t count.
Because the rollover ruling applies to a 12-month time period, and not any particular calendar year, taxpayers will have to be diligent when making rollover decisions, financial experts advise.
For more information about the new IRS guidelines on IRA rollovers, consult a tax professional or your accountant.