IRA Rollover Limits: Beware of 2015 Changes


IRA RolloverFor many years, the tax code has allowed an individual to take a distribution from his or her IRA account, This allowed the tax payer to avoid the tax and early distribution penalties if the distribution is redeposited to an IRA account owned by the taxpayer within 60 days of receiving the distribution. However, beginning this year, taxpayers will be limited to one IRA rollover per year.

Early in 2014, in a tax court case, the court ruled that taxpayers could only have one IRA rollover per 12-month period. This was contrary to the IRS’s long-standing one rollover per every IRA account every 12 months. This far more liberal position had also been included in published IRS guidance. However, contrary to general public opinion, guidance provided by the IRS in their publications is not listed, carries no weight in audit nor court, and only represents the IRS’ interpretation of tax law.

As a result, the IRS has been forced to adopt the Court’s more restrictive position, It did not apply the new interpretation until this year. This gives taxpayers time to become aware of the new restrictions. The IRS is modifying its published 2015 guidance to reflect this new position.

The IRS announced in November that the one-per-12-month-period IRA rollover rule also applies to Simplified Employer Pension Plans (SEPs) and SIMPLE plans. Included in the November announcement, the IRS indicated it would not count a distribution taken in 2014 and rolled over in 2015 (within the 60-day limit) as a 2015 rollover.

Not counted towards the one-per-12-month rule are traditional to Roth IRA conversions or trustee-to-trustee IRA transfers. These are where the funds are directly transferred from one IRA trustee to another.

Questions About Your IRA Rollover?

Do you have questions about the one-per-12-month limit? Please call this office if you are planning an IRA distribution and subsequent IRA rollover. If you have questions, thoughts or concerns regarding how to file IRA rollover information, WorthTax can help. We will review your taxes for you and advise you what is best for your tax filing status. We guarantee our pricing and discounts are available. Please feel free to contact us, leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

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For more information, call Alex Franch at 781.789.7200. WorthTax has locations in Norwell, Dedham, and Weymouth, Massachussetts.
Alex Franch

Mr. Franch is a Tax Specialist and Partner at Joseph Cahill & Associates / WorthTax. He has a diverse background including a Bachelor of Science from Boston College in Mathematics and extensive military service. Mr. Franch is an Enrolled Agent and has eight years of tax preparation experience. He has been serving individuals, families, and businesses for several years with tax and financial planning strategies and is a junior partner with the firm. Mr. Franch is licensed by the Financial Industry Regulatory Authority (FINRA) with a Series 6, 63, 65, and 7, and by the Commonwealth of Massachusetts Division of Insurance.

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