One IRA rollover per year
I was not aware of the IRS ruling about one IRA rollover per 12 month period. In April 2016 l had an IRA mature and had the bank send me a check. I rolled that IRA into a mutual fund.
I had another IRA mature in October 2016 and had the bank send me a check. I was making application to rollover this IRA when the bank told me I could not do that because of the one rollover per 12 month period ruling.
I am still within my 60 day rollover period.
Can I rollover the October 2016 IRA into a Roth IRA within the 60 day period and then prior to October 15, 2017 recharacterize the Roth back to a traditional IRA and avoid treating the October IRA as ordinary income?
Permalink Submitted by Alan - IRA critic on Tue, 2016-11-15 19:06
Yes, you can do that to escape the one rollover rule. Obviously, for this to work you must discover the error within 60 days of the distribution and before you did the disallowed rollover. A Roth conversion is exempt from the one rollover limitation. From now on, move funds by direct transfer between custodians rather than doing a 60 day rollover. This must be timed correctly so that the transfer request is received by the bank after the CD matures, but not before the usual 10 day or other grace period ends under which the funds can be transferred out without an early withdrawal penalty.