A client has a Traditional IRA and a Simple IRA. He would like to take a distribution from each account, then put everything back into the accounts the individual distributions came out of within 60 days (IRA distribution back into the same IRA, Simple IRA distribution back into the same Simple IRA). As I read pub 590, pages 23-25, this appears to be allowed. Am I correct?
The rule isn’t new. It’s in Section 408(d)(3). See Alvan L. Bobrow, T.C. Memo. 2014-21 (Jan. 27, 2014): http://ustaxcourt.gov/InOpHistoric/BobrowMemo.Nega.TCM.WPD.pdf; Bidyat K. Bhattacharyya, T.C. Memo. 2007-19: http://ustaxcourt.gov/InOpHistoric/Bhattacharyya.TCM.WPD.pdf; 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).
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
Permalink Submitted by Alan - IRA critic on Wed, 2014-05-07 19:39
You are correct for this year, but effective 1/1/2015 new rules take effect that limit your rollovers to one per 12 months for ALL your IRA accounts instead of one per account. See http://www.irs.gov/pub/irs-drop/a-14-15.pdf. Pub 590 will be changed to reflect the new rules.
Permalink Submitted by Andrew Glassberg on Sat, 2014-05-10 19:06
I assume there’s nothing in the new rules that would preclude both a husband and wife each doing 60 day rollovers within a calendar yet. Is that correct?
Permalink Submitted by Alan - IRA critic on Sat, 2014-05-10 23:33
RIght. Any limitations apply separately to each spouse.