How can I do a second IRA rollover in the same year without being penalized?

by Richard L. Ward, CPA | Sep 10, 2018

Earlier this year I did an IRA rollover. Last week I requested a check from my custodian to do another rollover, but now I find there is a one-time-per-year rule against multiple rollovers. I have the custodian's check in hand but haven't completed the rollover. How can I deal with this without the penalty? I am 70 years old.

You are not going to incur a penalty, being that you are 70 years old. The issue for you is whether or not you want the full check amount included in your gross income. A distribution from a traditional IRA may be excluded from gross income if you roll over the distribution to another traditional IRA or return it to the same IRA. Once you have made a tax-free rollover, you must wait at least one year from the date of receipt of the amount withdrawn before becoming eligible to engage in another rollover. 

The once-per-12-month rule applies on a taxpayer-by-taxpayer basis. The once-per-12-month rule does not apply to trustee-to-trustee direct transfers. The short answer to your question is, do a direct transfer.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Richard L. Ward, CPA, is president and CEO of Capital Configuration LLC in Pittsburgh.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.