One IRA Rollover Per Year: Direct vs. Indirect Rollover By Investment Tool

Submitted by Jed Stander on Thu, 2016-12-15 21:28

Questions: I am considering moving IRA between institutions, and am receiving some conflicting information from representatives at a couple of them regarding the IRS rule about IRA rollover within the same year. I would appreciate your replies to my questions below to help clarify the matter:

1) Does the one year IRA rollover restriction apply to direct custodian, indirect, or both types of rollovers?

2) Which of the following types of rollovers does the one per year IRA rollover restriction apply to: 401k IRA to TIRA rollovers, TIRA to TIRA rollovers, Roth 401k to Roth IRA? If it applies to more than one type, does that mean one is allowed to perform a rollover for one of each type within the same year, or does the restriction apply to only one total rollover per year regardless of type? For example, if I want to perform a 401k IRA to TIRA rollover in a year, does the restriction apply to performing a TIRA to TIRA rollover during the same 12 month period?

2) Is the definition of a “year” mean a calendar year or any 12 month period?



Submitted by Alan - IRA critic on Thu, 2016-12-15 22:26

  1. The one rollover limit applies to a 12 month consecutive period, not to a calendar year. It only applies to IRA to IRA indirect (60 day) rollovers, not to direct transfers. It also does not apply to Roth conversions, no matter how done.
  2. If a qualified plan such as a 401k is on EITHER END of the transaction, the limitation does not apply. So it only applies to TIRA to TIRA and Roth IRA to Roth IRA indirect rollovers. For the IRA to IRA rollovers, the limit is one rollover in total no matter how many IRAs are owned. It does not apply separately to TIRA or Roth. So if you do a TIRA to TIRA indirect rollover, you cannot do a Roth IRA to Roth IRA rollover. Again, if a 401k is on one end there is NO limit.
  3. 12 consective months is measured from the date you received the distribution, not to when the rollover is completed.
  4. The IRS can waive the 60 day rollover time limit, but cannot waive the one rollover per 12 month limit.
  5. This limitation means that if you do an indirect rollover, you cannot have done one in the prior 12 months, and you cannot do another one in the following 12 months. Save indirect rollovers for a true emergency by always doing direct transfers.
  6. https://www.irs.gov/pub/irs-drop/a-14-32.pdf

Submitted by Jed Stander on Fri, 2016-12-16 19:10

Thank you for your magnificantly thorough, insightful, and valuable explanation.  It sets the record straight for me, and  I appreciate it immensely!

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