Rollover IRA
A friend of mine has several IRA acounts at several different institutions. She has been told that she can complete only one rollover (within the allowed 60 days, of course) per twelve months regardless of how many acounts she has. I was under the impression that she could do a rollover every twelve months for each account (never the same money at the same institution.) Who’s right? She’d like to roll over several different accounts this year if it’s legal. Yes, she prefers rollovers to direct transfers (too slow!) Your advice will be much appreciated. Please keep it simple for my simple mind. With thanks, P. Rutt
Permalink Submitted by Alan Spross on Thu, 2008-12-11 20:42
You are correct, the limit does apply per account and not per taxpayer. But the per account limit also applies to an account that receives a rollover, ie if an account receives a rollover it can distribute a different rollover to another account. This should be kept in mind when consolidating accounts.
It is also conceivable that someone partitioning their IRA into a massive number of accounts from which they all did rollovers could be viewed by the IRS as being done solely to evade the rollover limits, but that should only be a problem in very extreme cases. Splitting assets between banks for FDIC protection limits or just diversification in a year of bank failures should not cause a problem, in fact it’s probably wise.
Some institutions have been known to mis state the rollover limit to retain funds that they otherwise stand to lose.