IRA One Rollover Per Year Rule

[PERSonalTime]

I want to make a rollover from a 401k and 403b into a Traditional IRA. I'm wondering if anyone knows if this type of rollover is subject to the IRA one rollover per year (12 month period) rule.

I know the rule isn't applicable to an trustee to trustee transfer from one IRA to another IRA, but I'm not sure about the rollover described above. Would a check made out to the receiving IRA institution, but mail directly to me for transmittal to the receiving institution be subject to the one year rule?

 

[Mulligan]

I can only answer the latter part. If it is sent to you no matter what is on the check, that constitutes a rollover... That is the reason why I had to renew a Roth CD for an additional year last year. I already did a separate rollover within the rolling 12 month period.
I did not want to deal with all the paperwork in a short period of time to try to do the trustee transfer so I just rolled the CD over for a .34% pittance. It matures this month again so I can then have a check made out to Vanguard and just mail it in to them and be done with it.


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[jazz4cash]

I can only answer the latter part. If it is sent to you no matter what is on the check, that constitutes a rollover... That is the reason why I had to renew a Roth CD for an additional year last year. I already did a separate rollover within the rolling 12 month period.
I did not want to deal with all the paperwork in a short period of time to try to do the trustee transfer so I just rolled the CD over for a .34% pittance. It matures this month again so I can then have a check made out to Vanguard and just mail it in to them and be done with it.


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I don't agree with the part in bold. Here is the IRS verbiage stipulating that the restriction is between IRA's, not 403b to IRA.

IRA One-Rollover-Per-Year Rule

Beginning in 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own (Announcement 2014-15 and Announcement 2014-32). The limit will apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.

• Trustee-to-trustee transfers between IRAs are not limited
• Rollovers from traditional to Roth IRAs ("conversions") are not limited

https://www.irs.gov/Retirement-Plans/IRA-One-Rollover-Per-Year-Rule

 

[Mulligan]

I went by what Vanguard officials told me and then I confirmed what they said on internet. Now, I did not clearly state this, but I was referring to trying to roll over two separate Roth Ira's from 2 different banks into my separate brokerage account. My experience seems to agree with your above paragraph. A Rollover is when you personally receive the funds.
Maybe its late and I am tired, but I do not see a contradiction in my experience and what your above paragraph states.


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[PERSonalTime]

I appreciate the responses, but who's right? Does anyone else have an opinion?

 

[Mulligan]

I appreciate the responses, but who's right? Does anyone else have an opinion?

Maybe Jazz will elaborate for you as Jazz may have more incite into your specific situation, as my situation is not specifically yours. Mine involved 2 Roths from two banks consolidating to a third account. I am very certain in my specific situation I could not rollover the second one for a rolling 12 month period.


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[gauss]

I don't agree with the part in bold. Here is the IRS verbiage stipulating that the restriction is between IRA's, not 403b to IRA.

IRA One-Rollover-Per-Year Rule

Beginning in 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own (Announcement 2014-15 and Announcement 2014-32). The limit will apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.

• Trustee-to-trustee transfers between IRAs are not limited
• Rollovers from traditional to Roth IRAs ("conversions") are not limited

https://www.irs.gov/Retirement-Plans/IRA-One-Rollover-Per-Year-Rule

+1

Rollovers from employer plans (ie 401ks) are not effected by the new one per 12-month period for IRAs. Distributions from 403(b)s and 401k(s) are not considered IRA distributions.

https://www.irs.gov/pub/irs-drop/a-14-32.pdf

The IRS will apply the Bobrow interpretation of § 408(d)(3)(B) for distributions that occur on or after January 1, 2015. This means that an individual receiving an IRA distribution on or after January 1, 2015, cannot roll over any portion of the distribution into an IRA if the individual has received a distribution from any IRA in the preceding 1-year period that was rolled over into an IRA.

In Mulliagn's case, he was receiving a distribution from his IRAs, and thus in his case the rule would apply.

-gauss

 

[kaneohe]

I went by what Vanguard officials told me and then I confirmed what they said on internet. Now, I did not clearly state this, but I was referring to trying to roll over two separate Roth Ira's from 2 different banks into my separate brokerage account. My experience seems to agree with your above paragraph. A Rollover is when you personally receive the funds.
Maybe its late and I am tired, but I do not see a contradiction in my experience and what your above paragraph states.


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This (from pub 590A) appears to be in conflict w/ what VG told you:
(however, before you make use of it, you probably want to confirm independently)

"Trustee *to*Trustee Transfer
A transfer of funds in your traditional IRA from one trustee
directly to another, either at your request or at the trustee's
request, is not a rollover. This includes the situation where
the current trustee issues a check to the new trustee but
gives it to you to deposit. Because there is no distribution
to you, the transfer is tax free. Because it is not a rollover,
it is not affected by the 1-year waiting period required between
rollovers. This waiting period is discussed later under
Rollover From One IRA Into Another.

 

[Mulligan]

This (from pub 590A) appears to be in conflict w/ what VG told you:

(however, before you make use of it, you probably want to confirm independently)



"Trustee *to*Trustee Transfer

A transfer of funds in your traditional IRA from one trustee

directly to another, either at your request or at the trustee's

request, is not a rollover. This includes the situation where

the current trustee issues a check to the new trustee but

gives it to you to deposit. Because there is no distribution

to you, the transfer is tax free. Because it is not a rollover,

it is not affected by the 1-year waiting period required between

rollovers. This waiting period is discussed later under

Rollover From One IRA Into Another.

Maybe its possible the clarifications from IRS came after I did mine, and at that time maybe that was the then understanding? This happened in summer of 2014 with first rollover, then second attempted one was January 2015. That was when I was blocked. It matures in a few weeks so it will be done soon anyways.
Hopefully OP gets proper clarification as no one wants to get caught up in the web of IRS penalties accidentally.


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[jazz4cash]

I went by what Vanguard officials told me and then I confirmed what they said on internet. Now, I did not clearly state this, but I was referring to trying to roll over two separate Roth Ira's from 2 different banks into my separate brokerage account. My experience seems to agree with your above paragraph. A Rollover is when you personally receive the funds.
Maybe its late and I am tired, but I do not see a contradiction in my experience and what your above paragraph states.


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I did not mean that your comment contradicts the item I pasted. I just meant my experience has been different from yours in that I have received checks from my 401k made out to my credit union (FBO: My Name) several times and they were treated as a transfers, not rollovers.

I see many examples of the terms Rollover and Transfer being used interchangeably so it's no wonder there is ongoing debate.

In the OP's case, I think we all agree that funds from a workplace plan are not subject to "One per Year Rollover Rule"