Steve Rawlinson from California posted over 10 years ago:

The article says that one is only allowed to make one IRA rollover in any 12-month period. Exceptions are listed including trustee-to-trustee transfers so long as the actual account is moved and not the assets from one account to another. This seems to indicate that it is not permitted to move funds more than once per 12-month period from one IRA account to another IRA account owned by the same person at the same broker. (My motivation is to move some funds from an account that is robo-managed to an account that I manage myself.) My broker has assured me that such is not the case. The explanation is that moving funds from one IRA account to another does not constitute a rollover; I am merely combining accounts, which is a non-taxable event. I certainly hope that my broker is correct. The opposite interpretation would make the rule silly. It is understandable that the IRS would not want to have the taxpayer using funds outside the IRA for up to 60 days at a time more than once per year, but as long as the funds are always in the care of the custodian, there should be no restriction on how the funds are managed.

Charles Rotblut from IL posted over 10 years ago:

Steve, Here is the original article we published at the time the new rules were announced. The IRS announcement about the rule is available on its website. -Charles

Michael Sims from IA posted over 10 years ago:

I am now retired and have an IRA. Can I roll it over to a Roth IRA? I know that it would be taxed, but now I am at a lower tax rate and believe that this may be valuable as it increases with my investments. Also, does the minimum distribution apply to a Roth IRA like it does for an IRA? thanks, M. Sims

Charles Rotblut from IL posted over 10 years ago:

Hi Michael, You can convert a traditional IRA to a Roth IRA. It's a conversion, not a rollover. One of the advantages Roth IRAs offer are no required minimum distributions. The conversion counts as taxable income, which can affect your Medicare Part B premium and the taxation of your Social Security benefits. Also, depending on the amount convert, it may bump you into a higher tax bracket. As such, depending on the size of the account, it may make sense not to do full conversion in one taxable year, but rather spread it out over a few years. -Charles

David from North Carolina posted over 10 years ago:

Do Roth 401 K accounts have required distributions? If so, why is that since they are after tax dollars? Also, I assume one can avoid such required distributions by converting the Roth 401 to a Roth IRA, is that correct? Thanks

Charles Rotblut from IL posted over 10 years ago:

Roth 401(k) accounts are subjects to required minimum distribution per the tax code. They can, however, be rolled over to a Roth IRA.

Wayne Maybach from VA posted over 10 years ago:

The article notes that "No taxes are triggered when Roth 401(k) assets are rolled over to a Roth IRA." However, I believe this does not cover the issue fully for if one's employer contributes to the employee's Roth 401K, the employer's contributions are most likely made with pretax monies and if so, when a conversion is made to a Roth IRA, that will trigger a taxable event and the employee will have to pay the tax on the employer's contributions.

Charles Rotblut from IL posted over 10 years ago:

Matching contributions must be made to a traditional 401(k) account, and not a Roth 401(k). So, the employee in this case will have two accounts. Here's what the IRS says: Your employer can only allocate your designated Roth contributions to your designated Roth account. Your employer must allocate any contributions to match designated Roth contributions into a pre-tax account, just like matching contributions on traditional, pre-tax elective contributions. -Charles

Wayne Maybach from VA posted over 10 years ago:

I agree, for my Roth 401K, Fidelity must keep my and my employer's contributions, and the earnings from such contributions, separate but they are reported to me in one account. The point is, there will be taxes due on my employer's contributions, and earning therefrom, when a rollover is made to a Roth IRA.

Richard Nelson from NJ posted over 10 years ago:

Question, the option to make an after tax contribution to a 401K, then immediately roll those dollars into a ROTH IRA still available?

Geoffrey Stuart from NJ posted over 10 years ago:

Charles, I believe you are misinterpreting the IRS rules you referenced regarding trustee-to-trustee partial transfers. You maintain that these transfers are limited to one per 12-month period, but if you reread Announcement 2014-32 carefully, you will note this language on Page 2: The one-rollover-per-year limitation also does not apply to a rollover to or from a qualified plan (and such a rollover is disregarded in applying the one-rollover-per-year limitation to other rollovers), nor does it apply to trustee-to-trustee transfers. See Rev. Rul. 78-406, 1978-2 C.B. 157. IRA trustees are encouraged to offer IRA owners requesting a distribution for rollover the option of a trustee-to-trustee transfer from one IRA to another IRA. IRA trustees can accomplish a trustee-to-trustee transfer by transferring amounts directly from one IRA to another or by providing the IRA owner with a check made payable to the receiving IRA trustee. IRS is clearly NOT limiting the transfer of "amounts" or a "a distribution for rollover" to one per 12 months. The intent of the Rule is to clamp down on the free use of funds for 60 days, which can occur when the funds pass directly to the taxpayer "on the way" to the receiving IRA trustee. These funds can be used for any purpose for 59 days and that's what IRS is limiting. The sort of strategy Steve Rawlinson uses is necessary for those of us investors who need to move funds around various brokerages in order to get better rates, functionality, or speed. I think a careful study of the language in 2014-32 will show that taxpayers are entitled to invoke any number of transfers without violating the rule, as long as the funds don't touch the taxpayer's hands in the process.

Geoffrey Stuart from NJ posted over 10 years ago:

Here's even clearer language from IR-2014-107, Nov. 10, 2014: "As before, Roth conversions (rollovers from traditional IRAs to Roth IRAs), rollovers between qualified plans and IRAs, and trustee-to-trustee transfers--direct transfers of assets from one IRA trustee to another--are not subject to the one-per-year limit and are disregarded in applying the limit to other rollovers."

Lee Hunter from UT posted over 10 years ago:

One consideration associated with retirement accounts is the ability to protect them from creditors such as one that may have won a lawsuit against you. The asset/creditor protection available to you depends on the type of retirement account you have, your state of residency, and whether the assets are yours or have been inherited. In general, the bankruptcy code gives protection to a debtor's funds in bankruptcy for 40l(k) qualified plans by exempting them from the bankruptcy estate. Traditional and Roth IRAs that are created and funded by the debtor are subject to an exemption limitation of $1 million in the aggregate for all such IRAs. Thus, one needs to seek qualified counsel before they rollover a 401(k) with assets in value over $1 million to an IRA.

David Goldberg from NC posted over 10 years ago:

Can I withdraw funds from my regular IRA to meet the MRD requirements into a Roth IRA? thanks David

Charles Rotblut from IL posted over 10 years ago:

David, You cannot use Roth conversions to avoid taking the RMD for the current tax year. -Charles

David Goldberg from NC posted over 10 years ago:

was afraid that been the case thank you David

Roger Landwehr from MN posted over 10 years ago:

I have two 401k plans and want to change most of the dollars to a Roth before I start taking Social Security in 2-3 years. Is this as simple as calling my broker and telling him to transfer ($100,000) from my 401k account, having ($25,000) set aside for taxes, and putting the remaining ($75,000) into a Roth account? It is my understanding that to get the tax free income from the Roth I need to then leave the money in the Roth for 5 years?

Charles Rotblut from IL posted over 10 years ago:

Roger, I would suggest calling your brokerage firm and asking them about the process. Any major brokerage firm should be familiar with the process and be able to explain the logistics. You will have to wait to access the Roth IRA dollars. Be sure you calculate the impact the conversion will have on your overall income for the current year to ensure you're not bumped into a higher tax bracket and/or trigger higher Medicare premiums. -Charles

Raymond Somers from NJ posted over 10 years ago:

Below are several questions and observations on the article and reader’s comments: The article states that the Rollover chart is reproduced with a few modifications, but it is not clear to me why the Simple IRA column was changed. It seems to make the published Chart incorrect, not merely easier to use. Noting the questions raised in the comments, it might be easier to understand footnote 2 in the Chart by noting that the IRS states (but not consistently) transferring “funds from one IRA trustee directly to another … isn’t a rollover.” I do not understand the use of the word forfeiture in “Failure to meet this deadline will result in not only a forfeiture of the withheld taxes …”; the withheld taxes appear on one’s income tax return as a credit against taxes due. (Note also that in many cases there may be no withheld taxes.) Readers should be aware that with a 60-day rollover an employer must withhold 20% of the taxable amount of the withdrawal from a qualified plan. If one intends to rollover the entire amount and thus avoid any income tax due, that 20% must be obtained from other accounts. (The withheld 20% cannot be accessed until the income tax return is filed.) No reference was made in the article to a portion of a rollover’s being composed of post-tax money. Space may not have allowed for a discussion of this topic, but it is relevant to Richard Nelson’s question (which does not appear to have been answered). You cannot rollover only the after-tax contribution to a 401(k). Any distribution, complete or partial, must include a proportional share of pretax and post-tax amounts in the account. Note also that many (most?) employers do not allow rollovers from qualified plans until one leaves the company. To clarify the answer to David Goldberg’s question about waiting 5 years to take money from a Roth conversion: in his scenario up to $75,000 can be taken income-tax-free from the Roth the day after the conversion. It will however be subject to a 10% penalty unless certain exceptions apply (including being over age 59 ½).

David Goldberg from NC posted over 10 years ago:

thank you Raymond Somers that 75000 is an interesting and potentially attractive twist

Richard Oehlberg from CA posted over 10 years ago:

To Charles Rotblut - Charles: Thank you for providing a review of IRA Rollovers. At one point or another everyone will do at least one and more likely multiple rollovers or trustee-to-trustee transfers. I agree with Geoffrey Stuart's comment/concern above on trustee-to-trustee transfers. You state in your article that: "Trustee-to-trustee transfers: You can move your account from broker to broker as many times as you like so long as you move the actual account and not the assets from one account to another. (If this sounds like a technicality, realize that it is a big one)." I have gone to the IRS Website at: https://www.irs.gov/retirement-plans/ira-one-rollover-per-year-rule That website does not appear to interpret a trustee-to-trustee transfer of assets as a "rollover." (I have also examined web pages that are referenced on the one I gave above.) Perhaps you are aware of additional information on the IRS website which can confirm your interpretation. If so your response with that reference would be greatly appreciated. It is important for AAII to maintain the integrity of the information provided to us members. If there is an IRS website confirmation of your article statement that I quoted above, please provide it. That reference will be very useful to us members. If not, please correct the article and AAII's interpretation of it so as to correctly reflect the IRS' published information and position. A correction will provide stress relief to those of us who do trustee-to-trustee transfers on a regular basis to implement our "Bucket" Strategy ( such as the "Bucket Strategy" of Christine Benz of Morningstar) or other similar strategies. Thank you.

Charles Rotblut from IL posted over 10 years ago:

Regarding transfers, I spoke with the IRS when the rule was first announced. The intent of the rule is prevent a shell game where IRA assets are moved from one IRA to another of a similar type, particularly for purposes of having short-term access to IRA assets. It does not apply to Roth IRA conversions or 401(k) rollovers. You can also move your account from one broker to another. It does not impact bucket strategies where assets are moved from a stock allocation to bond allocation each year. -Charles

Charles Rotblut from IL posted over 10 years ago:

I contacted the IRS earlier this week to get an additional clarification on the rules regarding rollovers and transferring a portion of an account's assets to another brokerage firm. Here is what they said: The only thing that triggers the one-per-year restriction on IRA rollovers is a “rollover,” which is the distribution of funds to the IRA owner followed by a contribution within 60 days to another IRA. A trustee-to-trustee transfer - which, by the way, can be accomplished by giving a check, made payable to the receiving IRA custodian, to the IRA owner for delivery to that custodian – is not a rollover, although the term is used to describe any movement of funds between plans and IRAs. Sometimes the term “60-day rollover” is used to distinguish a real rollover from a trustee-to-trustee transfer. I've correct the bullet point under the "Rules to Keep in Mind" from: Trustee-to-trustee transfers: You can move your account from broker to broker as many times as you like so long as you move the actual account and not the assets from one account to another. (If this sounds like a technicality, realize that it is a big one). to: Trustee-to-trustee transfers: You can move your account and IRA assets from broker to broker as many times as you like so long as the assets are not distributed to you. (A check payable to you instead of the receiving IRA custodian would trigger the 12-month rule.) -Charles

Charles Rotblut from IL posted over 9 years ago:

An update to the article. Effective August 24, 2016, the IRS will waive the 60-day requirement for rollovers if certain requirements are met. See IRS Rev. Proc. 2016-47 for more information.