One per Year Rollover

Submitted by Kirsten Sullivan on Thu, 2017-01-05 16:46

If a client took money out of their IRA on December 15,2016 and want to roll it back in within 60 days- since the 60 days runs into a new year (2017) – is that considered her 1 rollover for 2016 or for 2017? How does she show the IRS that it is for 2016?



Submitted by Alan - IRA critic on Thu, 2017-01-05 17:05

  • Client just reports the rollover as usual on Form 1040 for 2016. It does not matter that the rollover was completed in 2017. As for the one rollover limitation, the 12 months runs consecutively and the calendar year does not matter. To be able to complete this rollover she cannot have taken a prior distribution after 12/15/2015 that she rolled over. If she is OK there, then she can complete this rollover, but then would not be able to take another distribution in the future to be rolled over until 12/15/2017.
  • Note that if she did do a prior rollover in the past 12 months that does not allow her to complete this one, there is an escape hatch for that. It would require her to convert the distribution to a Roth IRA and then later recharacterize it back to her TIRA. That would be the only way to get the funds back into her TIRA.
  • The IRS wants to shut down short term “loans” from IRAs, and therefore adopted this new interpretation of the code 2 years ago. If client wants to simply change custodians, they should do so by direct trustee transfer, 

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