Rolling Over Your IRA? IRS Clarifies Rule
By Gabrielle Karol FOXBusiness
The Internal Revenue Service offered guidance this week on the new rules on rollovers between individual retirement accounts.
Starting in January 2015, individuals will be allowed only one tax-free IRA rollover during a one-year period. Previously, individuals could do one rollover per IRA account per year; if the taxpayer had four IRA accounts, he could do one tax-free rollover for each account. Now, each individual will get only one tax-free rollover a year, regardless of how many accounts he has.
However, the IRS is cutting a bit of slack to taxpayers; it said this week that it would give taxpayers a fresh start in 2015. As a result, taxpayers who may have just rolled over an IRA account will be allowed to take another tax-free rollover starting in the New Year.
Karl Fava, CPA, said rollovers are most common when an accountholder wants to change management companies, switching their IRA savings, for example, from, let’s say, a Charles Schwab account to a Fidelity account. It’s also fairly common to consolidate multiple IRA accounts, simplifying a taxpayer’s financial big picture.
But Fava said some individuals use tax-free IRA rollovers as a type of short-term loan. Under IRS rules, you have a 60-day period during which you can take your money out of one IRA account and put it in another account, before you have to pay taxes on that money. Continue reading full article………………………...