rollovers ira

[TAX4US]

Here is the real life situation I have. When IRA cd #1 came due at bank 1 in October of 13 tp took funds and went to bank 4. Put it all back in. When IRA #2 cd came due at bank 2 in November of 13 tp took funds to bank 5 and put it all back in. When IRA cd#3 at bank 1 came due in December of 13 tp took fund to brokerage in January of 14 and rolled all back in. Are we saying that because these are different that TP can do this? Just trying to get a good grip on this.

[Lion]

Did tp set up an IRA at bank 4 to receive funds within 60 days? Or is it now in a fully taxable account? Have you seen his documentation? Is tp expecting you to clean up his mess when he didn't bother to call you before taking withdrawals from his IRA?!

[DonB]

Here is the real life situation I have. When IRA cd #1 came due at bank 1 in October of 13 tp took funds and went to bank 4. Put it all back in. When IRA #2 cd came due at bank 2 in November of 13 tp took funds to bank 5 and put it all back in. When IRA cd#3 at bank 1 came due in December of 13 tp took fund to brokerage in January of 14 and rolled all back in. Are we saying that because these are different that TP can do this? Just trying to get a good grip on this.

See TTB page 13-22 second example. It looks like if distribution #2 from bank 1 was from the same IRA as distribution #1, your client has a problem. Distribution #2 from bank 1 is most likely taxable.

[Burke]

Are we saying that because these are different that TP can do this? Just trying to get a good grip on this.

The TP has two IRA accounts, each at a different bank. He's entitled to one rollover per year. Bank #1 did it twice in one year, disqualifying the second withdrawal. Forget that the funds are invested in CD's and it becomes a little clearer.

[John of PA]

I agree with Burke, only one rollover a year is allowed, unless they are direct Trustee to Trustee rollovers; regardless of how many IRA'a your working with. There was just a ruling on this summarized below.
"On Jan. 28, 2014, the Tax Court ruled that Code Sec. 408(d)(3)(B)'s one-rollover-per-year rule applies to all of a taxpayer's IRAs, not to each of his IRAs separately. IRS's position in this case, and the Court's holding, are at odds with IRS Publication 590, Individual Retirement Accounts. See Bobrow, TC Memo 2014-21".

[TaxGuyBill]

I agree with Burke, only one rollover a year is allowed, unless they are direct Trustee to Trustee rollovers; regardless of how many IRA'a your working with. There was just a ruling on this summarized below.
"On Jan. 28, 2014, the Tax Court ruled that Code Sec. 408(d)(3)(B)'s one-rollover-per-year rule applies to all of a taxpayer's IRAs, not to each of his IRAs separately. IRS's position in this case, and the Court's holding, are at odds with IRS Publication 590, Individual Retirement Accounts. See Bobrow, TC Memo 2014-21".

Wow. That's interesting.

http://www.ustaxcourt.gov/InOpHistoric/BobrowMemo.Nega.TCM.WPD.pdf

http://www.irawebadvisor.com/major-interpretation/

[Burke]

When IRA cd#3 at bank 1 came due in December of 13 tp took fund to brokerage in January of 14 and rolled all back in.

Based on this ruling, the 3rd withdrawal will be taxable too, since it was done within a year of the first. It is not clear from your post whether he withdrew these funds in 2013 or not.
If he did, he is going to have to report two withdrawals on the 2013 tax return. I try to get TP's to consolidate their IRA's, but it is difficult when they are invested in CD's which have different maturity dates.

[Gene V]

The latest update on IRA rollover

http://www.irs.gov/pub/irs-drop/a-14-15.pdf