SCENARIO: In one calendar year, Jessie completes the following transactions:
QUESTION: Has Jessie violated the one-rollover-per-year rule?
ANSWER: No, she has not.
EXPLANATION: The one-per-year rollover rule works as follows: First, it is true that a person can do only one 60-day rollover per year. The rule gets even more strict when you realize it is applicable across all accounts. Also, “per year” is not a calendar-year 12-months, but a rolling 365 days. For example, if a person receives an IRA distribution on May 1 and does a 60-day rollover to another IRA, she is not eligible to do another 60-day rollover from any IRA to another IRA until the following May 1. (Note that the 12-month period begins with the date the funds are received by the account owner.)
However, the finer details of the one-per-year 60-day rollover rule are important so as to be able to maximize the legal movement of funds. The following rollovers ARE subject to the rule:
The following rollovers are NOT subject to the rule:
In fact, of the five transactions completed by Jessie listed above, only item #2 was subject to the one-rollover-per year rule. An analysis of each transaction is as follows:
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