OUR THOUGHTS ON:

Taxpayers Will Be Limited to One Tax-Free Rollover Per Year

SD Medallion Services

By Kim Shields

The Internal Revenue Service has issued guidance on the January 2014 decision by the U.S. Tax court to limit the number of Individual Retirement Accounts (IRAs) taxfree rollovers to one per year.  Prior to 2015, the one-per-year limit is applicable for Individual Retirement Accounts on an IRA by IRA basis, meaning only one tax-free rollover per IRA.  The new law has been further explained that effective January 1, 2015, the one-limit tax-free rollover will be applied to the aggregate of all the taxpayers’ IRAs, effectively treating them as if they were one IRA for purposes of the limitation.

Consequently, any eligible IRA distribution received on or after January 1, 2015 which has been properly rolled into another IRA, will get tax-free treatment.  However, any subsequent distributions that happen before the one-year period will not be given tax-free rollover treatment.

As previously treated, Roth conversions, rollovers between qualified plans and IRAs, trustee to trustee transfers, and direct transfers of assets from one IRA trustee to another do not fall under the one-per-year limitation and are disregarded with respect to other IRA rollovers for purposes of applying the limit to rollovers per year.

Make sure that you are tracking your IRA transfers to ensure that your IRA transfer meets the requirements of a tax-free rollover or consult the Schneider Downs' Medallion Services group for guidance.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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