Advanced Underwriting Consultants

Question of the Day – December 23

Ask the Experts!

Here’s the question of the day.

Question: I have a client who wants to do a partial Roth conversion of an IRA distribution by 60 day rollover now, and another conversion by 60 day rollover from the same account in a few months.  Does the “one rollover per year” rule apply to prevent that?

Answer: No.

Here’s a quote from IRS Publication 590, which describes how the rule works:

Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover.

At first glance, it seems like the rule would prevent a second conversion from the IRA within a one year period.  However, as the publication makes clear, the one per year rule applies to tax-free rollovers.  A Roth conversion is not tax-free; it is a fully taxable event.  Hence the one per year rule does not apply.

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