James W. from CA posted over 12 years ago:

I would appreciate further clarification as this comment from the article seems like it is not correct: "The key is that you move the actual account, and don’t move funds from one IRA to another. (If that sounds like a technicality, realize it is a big one.)" That implies that moving money or holdings between identical IRA's at one brokerage firm counts as a rollover. However, in my experience the journal of assets between identical IRA's (rollover to rollover, Roth to Roth, etc.) at the same brokerage firm is not a rollover. Instead, it is a combining of accounts and is not re-portable in any way. Isn't the entire issue as to rather or not a 60 day rollover is in effect or not dependent upon the money coming out of an IRA and going into the hands of the recipient? That is the only way a "loan" could be created and that is what the IRS is trying to avoid in excess. I don't see how moving directly between IRA's at one firm is any different from transferring between firms. As long as the money does not come directly payable to me I believe no rollover has been created even under the new rules pending for 2015. I'm not stating the above as a fact. Rather it is to request clarification as to rather or not my thinking is correct. If moving money directly between identical IRA's becomes a problem this issue is a much bigger problem then many think. For example: those of us with portfolio managers would become much more limited in moving funds between managed and non-managed IRA's at the same brokerage firm. That just does not make any sense to me.

Charles Rotblut from IL posted over 12 years ago:

Hi James, You are correct. The tax rules are designed to prevent people from taking advantage of the 60-day window to get what is effectively a free short-term loan. I added the part about moving an account from broker to another to clarify what is and what is not allowed. -Charles

Christophe Couallier from FL posted over 12 years ago:

Thank you James for bringing this up. Good point to clarify. Let's take an example and see if we are clear. Say you have an IRA account with 5 funds at broker1. You transfer (partial or in full) the account holding to another existing IRA account at broker2. We agree this is a transfer and not a rollover, correct? Now, in the process of the transfer, you want to liquidate your funds at broker1 and thus transfer to the other IRA at broker2 the cash proceed from the sale. Is it still a transfer or a rollover? Finally, once the cash is in the IRA at broker2, you purchase 5 different funds. This would be neither a transfer nor a rollover, but a simple transaction similar to a rebalancing. Do you concur with the analysis or have I missed something? -Christophe

James W from CA posted over 12 years ago:

Hi Christophe, I agree with all of your points. None of your example transactions are rollovers. Hi Charles, Thank you for the clarification.

Gary from CT posted over 12 years ago:

Hi Charles - As a further example / clarification - If I had a traditional IRA at Broker 1, and they had poor short term CD rates and charged for buying Vanguard funds; and I wanted better short term CD rates and access to no fee Vanguard funds, could I open an IRA at Vanguard and another IRA at Discover Bank, and then transfer 1/3 of my funds from Broker 1 to Vanguard, and 1/3 of my funds from Broker 1 to Discover Bank (leaving the last 13 of my funds at Broker 1), and not have any IRS problems?

Bruce Austin from Nc posted over 12 years ago:

Does this also include moving funds from a past employee 401-k to a personal IRA?

Charles Rotblut from IL posted over 12 years ago:

Hi Bruce, My understanding is no if the 401(k) is still held through an old employer's plan. -Charles

Gary Pierce from CT posted over 12 years ago:

Thank you. Seems like I have to examine this more closely.

Fred S from MI posted over 12 years ago:

Back to the original further clarification requested by James regarding the paragraph stating: The new rollover rule will not apply to trustee-to-trustee transfers. Both .... confirmed that this means you can move your IRA accounts between brokers as many times as you would like over the course of a 12-month period. The key is that you move the actual account, and don’t move funds from one IRA to another. (If that sounds like a technicality, realize it is a big one.) The insinuation is there is some technicality that says there will be taxable consequences for anything less than a full account transfer between trustees. Is this what is really meant? and if it is, where is it in the IRS publications?

Lynn Abell from MD posted over 11 years ago:

My parents have CD's in their Roth IRA held by a local bank (yes, I've told them it's not the best idea to do this), so I initially thought there wouldn't be an issue, since there is no taxable event. However, an article I read in Kiplingers Retirement Report (Aug 14, pg 11) implies this would be a problem: Avoid Rollovers of IRAs Held at Banks It’s not unusual for a retiree to own multiple IRA certificates of deposit at once. When one CD matures, the bank will likely close the IRA and hand you a distribution check. You then roll the money into a new IRA CD, often at another bank that’s offering a higher interest rate. You repeat the process when the next CD expires. A new court ruling, however, can foul up the process. Until recently, if you owned more than one IRA, you could roll over each one once a year. As long as you completed the switch within 60 days of the payout, there was no tax. Now, thanks to a U.S. Tax Court opinion, such IRA CD rollovers could be “very risky” for older investors, says Natalie Choate, an estate-planning lawyer with Nutter, McClennen and Fish, in Boston. The court ruled that the once-a-year rollover limit applies to the investor, not to the individual IRA. No matter how many IRAs you own, only one rollover is permitted in any 12-month period. The IRS announced it will not enforce the ruling until 2015. You can avoid trouble by using direct IRA-to-IRA transfers rather than 60-day rollovers. With a transfer, the first bank with the maturing CD sends the money directly to the second bank, and you are never in possession of the money. “You can make as many direct transfers in a year as you want without any worries,” says Jeffrey Levine, IRA technical consultant with Ed Slott and Co., in Rockville Centre, N.Y. To use the direct-transfer method, first find out when your CD matures. Then find a bank with a better rate. Before the old CD comes due, open an IRA at the second bank and ask about any paperwork you must fill out to transfer the money. Make sure the second bank does not send the paperwork until the CD matures, or you’ll likely pay an early-withdrawal penalty. If you want to stick with the same bank, ask about its transfer procedure. Although the IRS says it will hold off enforcing the new rule, Levine encourages IRA owners to follow it immediately. It’s unclear when the 365-day clock begins. For instance, if you do a rollover in September this year and then another in March, it’s possible the IRS could look at the March rollover as the second one in the 12-month period. K —SUSAN B. GARLAND"

Hanh Whitman from VA posted over 8 years ago:

Hello Would you clarify the one per year rule does not apply to 403 b (retirement plan of non-profit organizations) in general and in this senario: 1. 403b all direct rollover from employer to Vanguard as new accoutn Rollover IRA in April 2017 2. Vanguard did a direct rollover of this Rollover IRA to the existing Traditional IRA in January 2017 for the purpose of consolidated accounts. Vanguard indicated that this consolidation will be reported on 1099R for the year 2018 as code G (rollover) but the rollover does not violate the IRS one rollover per year Is that true? Thank you in advance

Charles Rotblut from IL posted over 8 years ago:

Hanh, Vanguard is correct since funds when from a 403(b) to an IRA. -Charles