New IRA "60-day Rollover" Rule Interpretation

Beginning January 1, 2015, the Internal Revenue Service (IRS) will apply a new interpretation to Internal Revenue Code Section 408(d)(3)(b), which limits an individual to one nontaxable "60-day rollover" between IRAs in any 1-year period.  Under the new IRS interpretation, an IRA owner may only make one "60-day rollover" per year, even if the rollovers involve different IRAs.

A "60-day rollover" occurs when you receive a distribution from your IRA, and deposit the money into another IRA or back into the same IRA within 60 days. If you comply with the 60-day deadline, the distribution is not taxed. If you miss the deadline, you will owe income tax, and perhaps penalties, on the distribution.

The new IRS interpretation only applies to distributions where amounts are distributed to the IRA owner. The new interpretation will not affect transfers that go directly from one IRA provider to another. There is no limit on the number of such direct transfers that can be made each year.

The new IRS interpretation also does not apply to:

  • a rollover from a Traditional IRA to a Roth IRA (a "conversion") or
  • a rollover to or from a qualified retirement plan.

For additional information on the new "60-day rollover"interpretation, you may read the IRS announcement.

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