Source: https://www.retirement-taxplanning.com/key-developments/retiree-rollovers-to-iras-and-other-plans/
Timestamp: 2019-04-22 23:55:42+00:00

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However, the IRS denied a rollover for another taxpayer involved in the same settlement because the taxpayer had rolled over funds from the same IRA within the prior one-year period. Consequently, the second rollover would violate the rule allowing an owner only one rollover from the same IRA within a one-year period. (Ltr. Rul. 200452047.) See Chapter 5 of the treatise for a discussion of nontaxable rollovers from IRAs.
Rollover of Employer Stock Not Reversible. – A retiree inadvertently instructed her qualified retirement plan to roll over employer stock to her IRA. She had intended instead to take direct ownership of the stock so she could preserve and defer capital gain tax on its increase in value. The IRS, however, refused to allow her to ignore the rollover and correct her mistake. (Ltr. Rul. 200442032.) See Chapter 2 of the treatise for a discussion of the distribution of employer securities from a qualified retirement plan.
However, see Priv. Ltr. Ruls. 200447042 and 200406051, both implying that the 60-day rollover period begins with the issuance of the lost check and not with the subsequent replacement check. See Chapters 2 and 5 of the treatise for discussions of nontaxable rollovers from qualified retirement plans and IRAs.
See Chapters 2 and 5 of the treatise for discussions of nontaxable rollovers from qualified retirement plans and IRAs.
No 60-Day Waiver Due to Taxpayer’s Negligence. – The IRS denied a waiver for a taxpayer who placed on his calendar the wrong expiration date for the 60-day rollover period. To justify its ruling, the IRS cited Rev. Proc. 2003-16, 2003-1 C.B. 359, in which it stated that it would consider all the facts and circumstance in granting a waiver, including some specifically enumerated factors. Inexplicably, the IRS dismissed the waiver request in this private ruling on the narrow ground that the enumerated factors did not apply, without discussing whether other non-enumerated facts and circumstances might be relevant. (Ltr. Rul. 201216049.) See Chapter 5 of the treatise for a discussion of IRA rollovers.
Intervening Property Purchase Invalidates Attempted IRA Rollover. – The IRS ruled that the transfer to an IRA of real estate acquired by the IRA owner with cash distributed from another IRA could not qualify as a tax-free rollover. The rationale of the ruling would appear to apply to any property acquired with cash distributed from an IRA. (Ltr. Rul. 200647028.) See Chapter 5 of the treatise for a discussion of IRA rollovers.
Rollovers of Taxpayer Investment from Qualified Plans to Additional Types of Tax-Favored Plans. – In the past, a taxpayer could make a trustee-to-trustee rollover of his or her investment from one qualified plan to another qualified plan only if the recipient plan was a defined contribution plan that agreed to account separately for the rolled-over investment and related earnings. After 2006, a taxpayer may also make a trustee-to-trustee rollover from a qualified plan to a section 403(b) tax-sheltered annuity (TSA), or to another qualified plan even though it is not a defined benefit plan.
The recipient plan or annuity must provide for separate accounting for the rolled-over investment and related earnings (both pre-rollover and post-rollover earnings). As in the past, the tax law treats the amount rolled over as consisting first of earnings before including investment. (Pension Protection Act of 2006, Pub. L. No. 109-280, § 822(a), (b); I.R.C. § 402(c)(2)(A).) See Chapter 2 of the treatise for a discussion of rollovers of taxpayer investment in retirement plans.
The Trustee of an IRA or Plan Can Refuse to Accept a Rollover. – The trustee of an IRA or other tax-favored retirement plan can refuse to accept a rollover from another IRA or tax-favored retirement plan (unless the terms of the recipient plan or IRA specifically require acceptance of such rollovers). (Bohner v. Commissioner, 143 T.C. No. 11 (2014); Dabney v. Commissioner, T.C. Memo. 2014-108.) See Chapters 2, 4, and 5 of the treatise.
Revision of the One-Rollover-Per-Year Rule. – The Tax Court has held that a retiree may make an indirect rollover from one IRA to another only if the retiree has not already made an indirect rollover from an IRA to an IRA (or from a Roth IRA to a Roth IRA) during the preceding one-year period.
This restrictive holding of the Tax Court is inconsistent with the more lenient prior position of the IRS. Under the Service’s prior position, a retiree could not make an indirect rollover of a distribution from an IRA to another IRA if (1) the retiree received a previous distribution from the same IRA during the one-year period preceding the current distribution, and (2) he or she rolled over the previous distribution to an IRA. Nor could a retiree roll over IRA assets a second time if two different IRAs had made successive distributions of those same assets to the retiree during a one-year period.
Unfortunately, the IRS has announced that it will follow the more restrictive one-year rule laid down by the Tax Court for distributions after December 31, 2014. Note, though, that this more restrictive rule applies to distributions from two different IRAs only if each of the distributions occur after 2014. For example, in testing the validity of an indirect rollover of a 2015 distribution from an IRA, the Service does not take into account any indirect rollover of a 2014 distribution from a second IRA to a third IRA. (Bobrow v. Commissioner, T.C. Memo 2014-21; IRS Announcement 2014-15, 2014-16 I.R.B. 973; IRS Announcement 2014-32, 2014-48 I.R.B. 907.) See Chapters 5 and 6 of the treatise.
Multiple Rollovers from a Single Qualified Plan Distribution. – A retiree may make multiple rollovers from a single qualified plan distribution. If the multiple rollovers include a trustee-to-trustee rollover and an indirect 60-day rollover, the retiree must allocate the earnings portion of the distribution first to trustee-to-trustee rollovers. The retiree must allocate any remaining earnings in the distribution to subsequent indirect rollovers, before allocating investment to those indirect rollovers.
A retiree may also make trustee-to-trustee transfers from a qualified plan to both an IRA and another qualified plan, all out of the same distribution. If the retiree does so, and if the total amount rolled over exceeds the earnings in the distribution, the rollovers will include some of the investment in the distribution. In such case, the retiree may allocate the rolled-over investment between the recipient qualified plan and the IRA in any proportion desired. (Notice 2014-54, 2014-41 I.R.B. 670.) See Chapter 2 of the treatise.
Multiple Rollovers from a Single Roth Account Distribution. – A retiree may make trustee-to-trustee rollovers from a non-Roth account (1) to a Roth account in the same plan (taxable) and (2) to a traditional IRA (nontaxable), all out of the same distribution. If the retiree does so, and if the total amount rolled over exceeds the earnings in the distribution, the rollovers will include some of the investment in the distribution.
In such case, the retiree may allocate the rolled-over investment between the recipient Roth account and the IRA in any proportion desired, by so informing the plan administrator before the rollovers. Thus, the retiree may allocate the investment component of the distribution to the rollover to the Roth account to reduce the amount of tax on that rollover. (Notice 2014-54, 2014-41 I.R.B. 670.) See Chapter 7 of the treatise.
Rollovers to Simple IRAs Now Generally Allowed. – A taxpayer may now roll over distributions tax-free into a Simple IRA from other IRAs and tax-favored retirement plans, but only after expiration of the two-year period following the taxpayer’s first participation in a Simple IRA. During the same two-year period, the taxpayer may roll over a distribution from a Simple IRA only to another Simple IRA. (IRC § 408(p)(1)(B).) See Chapter 5 of the treatise.
Self-Certification of Permissible Reasons for Violating the 60-Day Rollover Requirement. – A retiree may be able to give a written certification to an IRA trustee that the he or she has permissible reasons for failing to satisfy the 60-day rollover requirement. The IRA trustee may then accept the rollover contribution despite violation of the 60-day requirement (unless the IRA trustee or plan administrator otherwise knows the rollover is not valid). For this purpose, the IRS has provided a list of permissible reasons for excusing a violation. (Rev. Proc. 2016-47, 2016-37 I.R.B. ___.) See Chapter 5 and Chapter 2 of the treatise.
Judicial Review of IRS Denials of Waivers of the 60-Day Rollover Rule. – The Tax Court has held that IRS denials of waivers of the 60-day rollover requirement are subject to judicial review. The court concluded it may reverse an IRS denial of a waiver if it finds the IRS abused its discretion, i.e., acted “arbitrarily, capriciously, or without sound basis in law or fact.” However, the taxpayer must have actually requested the waiver (i.e., by ruling request, self-certification, or during an examination). A court generally will not find the IRS abused its discretion if it did not have an opportunity to exercise its discretion. (Trimmer v. Commissioner, 148 T.C. No. 14 (2017).) See Chapter 5 and Chapter 2 of the treatise.
Automatic Waiver of the 60-Day Rule for a Returned Federal Tax Levy. – A waiver of the 60-day rollover rule is automatic for funds returned to a retiree after a federal tax levy on a plan or IRA. However, the rollover must be completed by the due date (not including extensions) of the return for the taxable year the funds were returned. (IRC § 6343(f); Bipartisan Budget Act of 2018, H.R. 1892, § 41104.) See Chapter 2, Chapter 4, and Chapter 5 of the treatise.

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