Advanced Underwriting Consultants

Ask the Experts – February 25

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers.  Here’s the question of the day.

Question: Does a direct trustee-to-trustee transfer of an IRA count as a rollover contribution for purposes of the one-rollover-per-year rule? Does a rollover from a qualified plan to an IRA count against the one-year rule?

Answer: No and no.

In Revenue Ruling 78-406, the IRS ruled that the one-year waiting period between rollovers applies only for 60-day rollovers—not for direct rollovers. For example, if an account holder has one IRA that he wants to split into three or more IRAs, he could do a 60-day rollover for one, and direct trustee-to-trustee transfers for the other IRAs.

The one-year waiting period also doesn’t apply for rollovers from a qualified plan to an IRA. The waiting period only applies to rollovers where the funds were received from an IRA—not a qualified plan.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.