one rollover per year rule
My client owned a non-traded REIT in her IRA that went public this fall. Client chose to rollover the shares to a new non-traded REIT. After the rollover occurred the REIT posted a partial-share distribution. In rolling over these funds, the new custodian insists this is a 2nd IRA rollover in the year. Can anyone give me some insight as to why this isn’t considered part of the original rollover? Any way the new custodian could reassess their decision? Thanks so much.
Permalink Submitted by Alan - IRA critic on Fri, 2013-12-13 19:22
Client is withdrawing funds from the IRA and rolling them to a different IRA account? If client just sold the original REIT and purchased a new one in the same IRA account, that would not be a rollover. But if client has taken a distribution and rolled it over to a new IRA account, they have to wait 12 months before doing another rollover. If client moved the money by direct trustee transfer, there is also unlimited such transfers that can be done.
Permalink Submitted by Mary Gies on Fri, 2013-12-13 20:16
The client did initiate a rollover from a Traditional IRA to Tranditional IRA via a trustee to trustee transfer. Should the new custodian consider this residual check a separate transaction, thereby not eligible for rollover, or can they consider it part of the original transaction, just a delayed receipt of the funds?
Permalink Submitted by Mary Gies on Fri, 2013-12-13 20:50
The client did initiate a rollover from a Traditional IRA to Tranditional IRA via a trustee to trustee transfer. Should the new custodian consider this residual check a separate transaction, thereby not eligible for rollover, or can they consider it part of the original transaction, just a delayed receipt of the funds?
Permalink Submitted by Alan - IRA critic on Fri, 2013-12-13 20:53
If the first move was done by trustee transfer, it does not count toward the rollover limitation. The second distribution could therefore by done by indirect rollover or also be trustee transfer. There is no provision that allows the split movement of funds to be considered combined into one movement, but that would not be necessary if direct trustee transfer is used.