Splitting up IRA’s to allow multiple 60 day rollovers
A recent Kiplinger Tax Newsletter noted that a Tax Court had ruled against an individual who withdrew funds from two IRA’s and repaid the money within the allotted 60 days.
The 2nd IRA was ruled to be a distribution.
Until this time, my understanding was that the individual account where the money was drawn could not repeate the process within a full year but other accounts could do so.
The article said that the IRS will need to change the language in publication 590 to clearly state this ruling which appearently caught them by surprise, also.
Has something changed or it is an interpretation of a vague rule?
Permalink Submitted by Robert Taylor on Mon, 2014-03-03 19:27
My timing was poor– the Ed Slott Newsletter covers this in depth.
Permalink Submitted by Alan - IRA critic on Mon, 2014-03-03 20:14
I would not be surprised if the IRS just left this issue hanging for quite some time. Meanwhile I would not be too concerned as an individual taxpayer who just happened to do rollovers from more than one IRA without establishing multiple IRAs just for this purpose, at least until the IRS changes their publications to conform to the tax court decision. That could take considerable time.
Permalink Submitted by Bruce Steiner on Mon, 2014-03-03 23:27
Here is the Tax Court opinion in Alvan L. Bobrow: http://www.ustaxcourt.gov/InOpHistoric/BobrowMemo.Nega.TCM.WPD.pdf. The Tax Court cited the Code, the legislative history, and two previous cases: Bidyat K. Bhattacharyya, T.C. Memo. 2007-19: http://ustaxcourt.gov/InOpHistoric/Bhattacharyya.TCM.WPD.pdf, and Marshall H. Martin, T.C. Memo 1992-331: http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl8dd0/2/doc, aff’d., 987 F.2d 770 (5th Cir. 1993).While the Tax Court did not mention Publication 590 (we don’t know whether the taxpayer mentioned it in his brief), the Tax Court has ruled that taxpayers can’t rely on IRS Publications. Cheryl J. Miller, 114 T.C. 184, 195 (2000): http://scholar.google.com/scholar_case?case=12346943473598395184&q=miller+114+t.c.+184&hl=en&as_sdt=4,192. Bruce Steiner, NYC, also admitted in NJ and FL
Permalink Submitted by Bruce Steiner on Thu, 2014-05-15 14:27
The sequel to Bobrow is that the taxpayer filed a motion for reconsideration, and the case was apparently settled. Here is the Tax Court’s order: http://www.ustaxcourt.gov/UstcDockInq/DocumentViewer.aspx?IndexID=6250767