The Internal Revenue Service (IRS) has provided guidance that it will follow a recent tax court decision interpreting an Internal Revenue Code requirement allowing taxpayers to complete only one rollover per year from an Individual Retirement Account (IRA) into another IRA.
Practitioners and the IRS previously interpreted this rule to apply separately to each IRA an individual owns. The tax court rejected this view in Bobrow v. Commissioner, holding that the one-rollover-per-year limit applies across all of a taxpayer’s IRA accounts.
The IRS announcement indicates that the agency will not apply its interpretation of Bobrow until January 1, 2015, and it expects to issue proposed regulations by that time. The once-per-year restriction does not apply to direct transfers from one IRA to another and applies only to distributions that are reinvested in an IRA within 60 days in accordance with rollover rules.