Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Wednesday, July 30, 2014

Rules of Rollovers


Until recently, if you owned more than one IRA, you could rollover each once a year.  However, thanks to a U.S. Tax Court opinion, IRA certificate of deposit rollovers could be “very risky” for older investors. 

The court ruled that the once-a-year rollover limit applies to the investor, not to the individual IRA; thus, no matter how many IRAs you own, only one rollover is permitted in any 12-month period.  The IRS announced that this ruling would not take effect until 2015. 

To avoid problems you can use a direct IRA-to-IRA transfers rather than 60-day rollovers.  With a transfer, the firs 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.”

Although the IRS will not immediately enforce the rule, experts encourage IRA owners to follow it immediately.  It is unclear when the 365-day clock begins.

See Susan B. Garland, Avoid Rollovers of IRA CDs, Dallas News, July 29, 2014.


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