The rules for IRA rollovers changed effective January 1, 2015. Please be sure you are following a guide dated January 1, 2015 or later.
Understanding the difference between an IRA to IRA transfer (recommended method) and an IRA to IRA Rollover
IRA to IRA Transfer: (recommended method)
Funds flow from your account at the former IRA trustee to your account at the new IRA trustee without touching you (the IRA owner):
Q. How often can an IRA be “transferred”?
Q. Are there any taxes and penalties?
A. An IRA to IRA Transfer is not a taxable event. As a result, there are no income tax penalties.
IRA to IRA Rollover:
Funds flow from the former IRA Trustee to the owner of the IRA. The owner of the IRA deposits the funds in their personal checking account and writes a check to the new IRA trustee.
Q. How often can IRA funds be rolled-over?
A. IRA rollovers can be done once in a 12-month period (not calendar year).
Q. Is each IRA account counted separately?
A. Each IRA account is not counted separately. However, the 12-month restriction applies to the individual. If you have several accounts, you are permitted only one rollover per 12 months, not one rollover per account.
Q. What happens if I make a second rollover in 12 months?
A. If you make a second rollover in 12 months, it will be treated as an IRA distribution and will be considered a taxable event.
Reference: Internal Revenue Code Section 408(d)(3)(B)
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