one rollover rule

Submitted by monica ponce on Tue, 2015-01-27 18:16

I have a client who had one big IRA. they took that money and split it into two iras. because of the new rule in 2015 they’re going to get penalized for one of the iras correct? is there any way for me to correct this?



Submitted by Alan - IRA critic on Tue, 2015-01-27 20:02

  • If this was done by direct transfer, there is no problem since they do not count as rollovers. If they received a check made out to them (a distribution), then they have used up their one indirect rollover for 12 months. This will not cost them because ONE is permitted, but they cannot do another indirect rollover for 12 more months, so they need to understand this before taking another distribution.
  • They also have a problem if the large IRA account either received an indirect rollover or made a distribution that was rolled over in the 12 months prior to the current rollover. That was the old rule that applied PER IRA account, so if the recent rollover was the second in 12 months for the large IRA, that would violate the rule.

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