rollover once a year rule
re: rollover once a year rule. Paragraph 4360 of RIA Fed Tax Handbook says rollovers of IRA to IRA only allowed once every 12 months, but qualified rollovers are disregarded for this rule. So what is a qualified rollover? Is it ok to roll the same type of IRA from one Custodian to another Custodian using Custodian to Custodian transfer more frequently than once every 12 months?
Permalink Submitted by Denise Appleby on Wed, 2008-09-24 22:35
The once per twelve month rule applies only for rollovers between the same types of IRAs. For this purpose, IRAs are broken down into two types:
[b]1)[/b] Roth IRAs, and
[b]2)[/b] Non-Roth IRAs.
If the movement is done as a [url=http://www.retirementdictionary.com/Transfer.htm%5Dtrustee-to-trustee transfer[/url], then there is no limit on the amount of times this can be done.
A rollover is reportable ( and involves a [url=http://www.retirementdictionary.com/Distribution.htm%5Ddistribution%5B/url%5Dand a [url=http://www.retirementdictionary.com/Rollover-Contribution.htm%5Drollover contribution[/url]), whereas a transfer is non-reportable. Typically, when doing a transfer, you contact the receiving financial institution, and instruct them to initiate the transfer. The transfer is then done as an ACAT or non-ACAT transfer.
By ’qualified rollovers’ they are likely referring to a rollover, where a qualified plan, 403(b) or 457(b) is on the delivering or receiving end