Academic journal article Journal of Accountancy

IRS Fills in Details of One-a-Year IRA Rollover Rule: Under Transition Relief, the Bobrow Aggregation Rule Disregards Certain Distributions Occurring in 2014

Academic journal article Journal of Accountancy

IRS Fills in Details of One-a-Year IRA Rollover Rule: Under Transition Relief, the Bobrow Aggregation Rule Disregards Certain Distributions Occurring in 2014

Article excerpt

The IRS clarified how the recently announced change in how it interprets the statutory one-rollover-per-year rule for individual retirement arrangements (IRAs) affects 2014 rollovers and how the rules apply starting in 2015.

Sec. 408(d)(3)(A)(i) permits a tax-free rollover of funds in a taxpayer's IRA, as long as the amount distributed to the taxpayer is paid into an IRA for the taxpayer's benefit within 60 days, subject to the one-rollover-per-year limit of Sec. 408(d)(3)(B). The Tax Court in Bobrow, T.C. Memo. 2014-21, held this rule applies on an aggregate basis, meaning no matter how many IRAs a taxpayer has, the taxpayer is limited to one rollover per year. In March, the IRS announced it would follow the Bobrow decision but, acknowledging its contrary guidance in Publication 590, Individual Retirement Arrangements (IRAs), and never-finalized 1981 proposed regulations, said it would delay application of the aggregate limitation until 2015 (see prior Tax Matters coverage: "Rollover Contribution to Second IRA Disallowed," May 2014, page 61, and "Multiple IRA Rollover Case Settled," July 2014, page 84).

Other than under a transition rule, below, an individual receiving an IRA distribution on or after Jan. …

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