The 60-Day IRA Rollover Cheat Sheet – What Counts and What Doesn’t

By Beverly DeVeny, IRA Technical Expert

Follow Me on Twitter: @BevIRAEdSlott

IRS has announced that they are going to go along with the Tax Court decision in the Bobrow case, but they won’t do so until at least January 1, 2015. What’s this mean? Going forward, you will only be able to do one 60-day IRA-to-IRA rollover per year. No longer will you be able to do one 60-day rollover per IRA account within the same time frame.

A 60-day rollover is one where you receive a distribution from your IRA account made payable to yourself. You can cash the check and do anything you want with the money while it is outside of your IRA. You have 60 days from the date you receive the distribution to redeposit the IRA funds into the same or another IRA. If you do so, the distribution and subsequent rollover are a non-taxable event (reportable, but non-taxable).

The following 60-day rollovers DO count in the once-per-year rollover rule.

• Rollovers from one IRA to another IRA – this includes SEP and SIMPLE IRAs
• Rollovers from one Roth IRA to another Roth IRA

The once-per-year rollover rule applies separately to IRAs and Roth IRAs. Thus you can do one IRA-to-IRA 60-day rollover and one Roth-to-Roth 60-day rollover in the same year. The year is a full 12 months, not a calendar year.

The following 60-day rollovers do NOT count in the once-per-year rollover rule.

• Rollovers from IRAs to Roth IRAs, also known as Roth conversions
• Rollovers from IRAs to non-IRA employer plans like 401(k)s and 403(b)s
• Rollovers from non-IRA employer plans to IRAs or Roth IRAs

Once the new rules kick in, you’ll still be able to do as many transfers as you want during the year. In a transfer, IRA assets go directly from the old custodian to the new custodian. You don’t have access to the funds while they are out of your IRA.