One Rollover Per Year

Reviewed or updated February 11, 2018

The IRS has clarified its position on how the limitation of one rollover per year applies for years after 2014.

Generally the best way to move money from one IRA to another is in a direct transfer from one IRA trustee to another. These trustee-to-trustee transfers are efficient and rarely create problems. The alternative is to take money out of one IRA in a distribution and, within 60 days later, contribute it to another IRA. These 60-day rollovers can go awry if something prevents the money from landing in the new IRA within the time limit. They’re also subject to a rule that allows only one such rollover per year.

Changed interpretation

For many years, informal guidance from the IRS indicated that this one-per-year limitation on 60-day rollovers applied separately to each IRA. In other words, if you had more than one IRA, you could do a 60-day rollover from one of those IRAs even if you had done a 60-day rollover from the other within the past year. Early in 2014, the Tax Court held that the law permits only one 60-day rollover per taxpayer per year. According to the court, the informal guidance from the IRS was too liberal on this point — and because the guidance was informal, taxpayers could not rely on it.

The IRS responded by announcing they would apply the rule in accordance with the Tax Court’s opinion, but only for IRA distributions occurring after the end of 2014. A subsequent announcement provided further clarification.

Rules for 2015 and later years

The rule allowing only one 60-day rollover per year does not apply to any of the following:

  • A transfer from the trustee of one IRA to the trustee of a different one. These can be accomplished either by a direct transfer from one trustee to the other or by having the first trustee provide the IRA owner with a check payable to the receiving trustee.
  • A rollover to or from a qualified plan. Note, however, that the limitation does apply to rollovers to or from SIMPLE IRAs and SEP IRAs.
  • A Roth conversion. These are disregarded in applying the limitation, even if the conversion takes the form of a distribution from a traditional IRA that is rolled into a Roth IRA within 60 days. However, the one-rollover-per-year rule applies globally to all IRAs, so if you have both a traditional IRA and a Roth, a rollover from one of these to another IRA of the same type would prevent you from doing a rollover from the other within 12 months.

Transition rule

Earlier informal guidance from the IRS permitted more than one 60-day IRA rollover per year provided that the second rollover did not involve either the distributing IRA or the receiving IRA of the previous rollover. As a transition rule, the IRS says that for purposes of determining whether a 2015 distribution can be rolled over, it will disregard a distribution occurring in 2014 that is rolled over provided that the 2015 distribution is from a different IRA that neither made nor received the 2014 distribution (in other words, it will apply the old, less strict guidance in looking back at rollovers initiated in 2014).

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