Virginia Beach, VA (Law Firm Newswire) August 18, 2015 – IRA rollover rules changed recently, and it is important for people planning IRA rollovers to understand the updated rules.
Under a recent United States Tax Court ruling, individuals are allowed only one tax-free IRA rollover every year, or 365 days, even if the individual owns several IRAs. The ruling represents a change from the previous policy, which allowed individuals to make one rollover per IRA each year.
Under tax law, IRA distributions are subject to federal income tax, unless the distribution is placed into the same or another IRA within 60 days, a process known as a rollover.
“Historically, one tax-free rollover was allowed per IRA account each year, so people with several IRAs could make several rollovers if necessary,” said Andrew H. Hook, a Virginia elder law attorney with Hook Law Center, with offices in Virginia Beach and northern Suffolk. “Under the new ruling, only one rollover per year is permitted, even if the person has several IRAs. To avoid this issue, there are other options such as direct trustee-to-trustee transfers.”
During a direct trustee-to-trustee transfer IRA money is moved by splitting a single IRA into several new IRAs, and naming someone, such as a child, as the beneficiary of each account. This process essentially acts as a tax-free rollover into each of the new IRAs, but does not count as a rollover under the new rule.
Because the new rollover rule is much more stringent, it is recommended that people considering significant IRA transactions consult with a tax professional before taking action. Professional guidance can help IRA holders avoid thousands in unanticipated taxes.
Learn more at http://www.hooklawcenter.com/
Hook Law Center
295 Bendix Road, Suite 170
Virginia Beach, Virginia 23452-1294
5806 Harbour View Blvd.
Suffolk VA 23435
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