One 60-Day Rollover Per Year?
Understanding Regulations Around IRA Rollovers
Scenario Overview
In one calendar year, Jessie completes the following transactions:
- Takes a partial distribution from her 401(k) and does a 60-day rollover to an IRA.
- Does a 60-day rollover from one traditional IRA to another traditional IRA.
- Takes another partial distribution from her 401(k) and, within 60 days, deposits the cash directly into a Roth IRA.
- Takes a distribution from her traditional IRA and, within 60 days, deposits the cash directly into a Roth IRA.
- Closes out her 401(k) and does a 60-day rollover of remaining plan assets to a traditional IRA.
Question: Has Jessie Violated the One-Rollover-Per-Year Rule?
Answer and Explanation
No, she has not.
Here's how the one-per-year rollover rule applies to Jessie’s transactions:
The one-per-year rollover rule works as follows: First, it is true that a person can do only one 60-day rollover per year. The rule gets even more strict when you realize it is applicable across all accounts. Also, “per year” is not a calendar-year 12-months, but a rolling 365 days. For example, if a person receives an IRA distribution on May 1 and does a 60-day rollover to another IRA, she is not eligible to do another 60-day rollover from any IRA to another IRA until the following May 1. (Note that the 12-month period begins with the date the funds are received by the account owner.)
However, the finer details of the one-per-year 60-day rollover rule are important so as to be able to maximize the legal movement of funds. The following rollovers ARE subject to the rule:
- IRA to IRA
- Roth IRA to Roth IRA
The following rollovers are NOT subject to the rule:
- Plan to IRA
- IRA to Plan
- IRA to Roth IRA (a Roth conversion)
Detailed Analysis of Transactions
In fact, of the five transactions completed by Jessie listed above, only item #2 was subject to the one-rollover-per-year rule. An analysis of each transaction is as follows:
- Plan-to-IRA rollover: Not subject to the one-per-year rule. Individuals can perform multiple plan-to-IRA 60-day rollovers without restrictions.
- IRA-to-IRA rollover: As mentioned, this is Jessie’s only transaction subject to the rule. She cannot do another IRA-to-IRA (or Roth IRA-to-Roth IRA) 60-day rollover for 365 days.
- Plan-to-Roth IRA: This transaction qualifies as a valid Roth conversion.
- IRA-to-Roth IRA: This transaction qualifies as a valid Roth conversion.
- Plan-to-IRA: No restrictions on these transactions.
By Andy Ives, CFP®, AIF®
IRA Analyst
Ed Slott and Company, LLC
Expert Insight on Regulations Around IRA Rollovers
For personalized advice on managing your rollovers and navigating IRA rollover regulations,, consult one of our knowledgeable financial advisors.
Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.