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Types of Rollovers Not Subject to the Once-Per-Year Rule

Photo courtesy of Paula Borowska on unsplash.com.

Photo courtesy of Paula Borowska on unsplash.com.

In a previous article we discussed the changes to the IRA One-Rollover-Per-Year rule.  There are certain types of rollovers that are not included in that restriction, detailed below.

As mentioned in the earlier article, trustee-to-trustee transfers are not considered “rollovers” by the IRS regarding this rule.  So you are allowed to make as many trustee-to-trustee transfers in a year as you like – no restrictions on these kinds of transfers at all.  This includes trustee-to-trustee transfers from or to IRAs, 401(k)s, 403(b)s, or any eligible plan.

In addition, a rollover from an IRA into a 401(k) or other Qualified Retirement Plan (QRP) is not impacted by this rule.  This means that you can roll funds out of your IRA and into your employer’s 401(k) plan with no restriction – regardless of whether or not you have already made an IRA-to-IRA rollover in the previous 12 months.

Similarly, a rollover from a 401(k) or other QRP into an IRA is also not covered by the once-per-year rule.  Just like going the other direction, you could rollover funds from your 401(k) plan into an IRA (via a non-direct transfer) and it will not count against the one-rollover-per year restriction.

Roth IRA conversions do not count toward the one-rollover-per-year rule either.  This could be a method for moving funds around if you’ve been otherwise restricted by a prior indirect or 60-day rollover.  Even though moving money from a traditional IRA (or QRP) to a Roth IRA via a conversion is technically termed a rollover, these conversions are not counted toward the once-per-year rollover restriction.

3 Comments

  1. RandyNo Gravatar says:

    If you are still employed by the organization you have a 457 plan with, are you able to transfer the balance to an IRA while still participating in the 457? I would like to move the balance semi-annually to my IRA which has lower fees that my 457 choices.

    1. jblankenshipNo Gravatar says:

      Generally speaking this kind of in-service distribution is not an option for any QRP, including 457 plans. If any in-service distributions are available at all, that would be up to the plan administrator to determine what circumstances would allow it.

      jb

      1. RandyNo Gravatar says:

        Thank you.

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