IRA Roll-Overs – Now the limit is ONE!
So you have an IRA and you don’t like who’s managing it or your options in it. The solution was simple – just roll it over to someone or something else. The roll-over was tax free and there were no issues, penalties or strings. You could only do this once per year per IRA. But you could do EVERY IRA you owned EVERY YEAR if you wanted.
Not anymore! Thanks to a Tax Court interpretation of the applicable statute early in 2014, the limit is now ONE PER TAXPAYER PER YEAR. If you have more than one IRA and try to roll over more than the one-per-year then the 2nd roll-over will be subject to penalty and tax.
The IRS has indicated that this interpretation will not be enforced until January 1, 2015 so if you have plans to roll-over, make sure to do them before the end of 2014.
This change will likely have a significant impact on the flexibility taxpayers have on their IRA management and choices. And this will likely push more and more IRA owners to take the self-directed route where they can change options without having to roll-over funds. And it’s a handy solution to the problem once the original funds are in the self-directed retirement plan. But remember that getting your plan into a self-directed arrangement requires a roll-over so either get them all done now, or do them one per year from 2015 forward.
Have questions about how to handle your IRA? Contact us today to schedule your free tax consultation by calling (480) 888-7111 or by submitting a web request here.