The BNA Tax and Accounting Center is the only planning resource to offer expert analysis and practice tools from the world's leading tax and accounting authorities along with the rest of the tax...
By Kathleen Ford Bay, Esq.
Lippincott Phelan Veidt PLLC, Austin, TX
Generally, §408(d)(3)(A)(i)1 provides that any amount distributed from an individual retirement account (IRA) will not be included in the gross income of the distributee to the extent the amount is paid into an IRA for the benefit of the distributee no later than 60 days after the distributee received the distribution. However, §408(d)(3)(B) provides that if the taxpayer has used the 60-day exception to exclude another distribution within one year prior to the date of the current distribution, then no exception will apply. Prop. Reg. §1.408-4(b)(4)(ii) and Publication 590, Individual Retirement Arrangements (IRAs), each took the position that §408(d)(3)(B) applied on an IRA by IRA basis. However, in Bobrow v. Commissioner,2 the Tax Court held that §408(d)(3)(B) applied on an aggregate basis and, therefore, a taxpayer cannot make a non-taxable rollover from one IRA to another if that taxpayer had already made a rollover for any of the taxpayer's IRAs in the preceding one-year period.
In Announcement 2014-15,3 the IRS indicated that it would follow the Bobrow decision and apply the one-rollover per year (not calendar year, but rather within a 12-month period) limitation on an aggregate (not per IRA) basis. Additionally, the IRS indicated that it would withdraw Prop. Reg. §1.408-4(b)(4)(ii), and, if determined to be necessary to follow the Tax Court's interpretation, issue a new proposed regulation, and revise IRS Publication 590 to conform with the Tax Court's interpretation. However, for relief during a transition period, the IRS stated that the aggregate interpretation will not be applied to any IRA rollover with regard to a distribution taken before January 1, 2015.
Additionally, during a September 11, 2014 IRS webinar, an IRS employee not speaking in an official capacity indicated that the one-rollover on an aggregate basis rule is not just for IRAs; it also affects simplified employee pension (SEP) plans and savings incentive match plan for employees (SIMPLE) IRA plans.
For more information, in the Tax Management Portfolios, see Kennedy, 367 T.M., IRAs, Mezzullo, 814 T.M., Estate and Gift Tax Issues for Employee Benefit Plans, and in Tax Practice Series, see ¶5610, IRAs, ¶6350, Estate Planning.
Copyright©2014 by The Bureau of National Affairs, Inc.
1 §408(d)(1). Unless otherwise specified, all "Section" or "§" references refer to the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
2 T. C. Memo 2014-21.
3 2014-16 I.R.B. 973.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)