Here is a quick guide to help you understand the new once-per-year rollover rule and how it affects your IRA rollover plans.
Don’t process an IRA rollover IF:
You already made one tax-free rollover from an IRA to another (or the same) IRA within the last 12 months.
Key Items:
- The once-per year rule means once every 365 days, not once per calendar year.
- The limit applies to ALL IRAs in aggregate, including Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.
- The IRS cannot allow you to fix violations of the once-per-year rollover rule like they can for some 60-day rollover violations.
A Few Exceptions to this New Rule:
- IRA to a Roth IRA conversions
- IRA rollovers to and from company retirement plans such as 401(k)s including a ROBS 401k and a Solo 401k
- IRA first-time home buyer distributions when the purchase is delayed or cancelled.
- Qualified reservist distributions that are timely repaid
- IRA-to-IRA or Roth IRA-to-Roth IRA direct transfers
- IRA direct rollover to a Solo 401k or Rollover as Business Startup 401k/PSP
Compliance Note:
One solution to avoiding the new once-per-year rollover rule is to move IRAs via a direct transfer. The regulations allow unlimited direct (trustee-to-trustee) transfers between IRAs because they are not considered rollovers.
