As of 2015, there is a new limit on the number of times a taxpayer can rollover money from one IRA to another. Previously, taxpayers could rollover once a year from each of their IRA accounts regardless of how many IRA accounts they held.
As of January 1, 2015, taxpayers may only withdraw money from one Traditional or Roth IRA account and redeposit into the same type of IRA in any 12-month period. The money withdrawn must be re-deposited into the same type of IRA within 60-days without incurring any tax or penalties. Note that the 365 day period is not determined on a calendar-year basis. Instead, it starts when an IRA owner receives the distribution.
It should be noted that trustee to trustee transfers between IRAs are not limited. IRA owners (the taxpayer) may move their IRA(s) from one institution to another. The new rollover limit does not affect this provided that the money is transferred directly from one institution (custodian) to another and the money is not withdrawn by the taxpayer. If the IRA owner is moving their IRAs from a small institution to another, the taxpayer may accept a check from the first institution (old custodian) made out to the new institution (new custodian) without incurring tax or penalties.
Rollovers from Traditional to Roth IRAs (“conversions”) are not limited.
Note – If IRA rollovers are initiated from Traditional or Roth accounts prior to January 1, 2015, the IRA owner has the required 60-days to deposit the withdrawn money into the same type of IRA account without incurring tax or penalties and these transfers will not count towards the once-per-year limit.
Please feel free to contact us if you have any questions on how this may impact your tax situation.