Internal Revenue Code SECTION 408(d)(3)(B) requires one tax-free rollover per year for IRA funds distributed to the IRA holder.

The distributed funds must be redeposited back into the IRA account within 60 days of the withdrawal in order to avoid taxation of the IRA distribution. Prior to this tax court ruling, the one tax-free rollover per year related to each IRA account was maintained.

The TAX Court decision in Bobrow held that the one rollover applies to all IRA accounts in aggregate. The IRS reiterated that this new interpretation will not affect the IRA owner’s ability to transfer funds from one IRA Trustee to another IRA Trustee, a Trustee to Trustee transfer, because those transactions are not considered roll over’s and not subject to the one a year rollover rule.

A rollover is a transaction where the IRA owner withdraws the funds from the IRA and within 60 days redeposits the funds. The aggregation rule is effective for IRA rollovers commencing January 1, 2015.

Please contact me at [email protected] or 732-531-8000, ext 225 for any tax issues. We are happy to perform a free evaluation of your last year’s tax returns, personal or business.