Question 38 — IRA Rollovers

Q. Suppose you have a client who was age 59½ on Jan. 1, 2015. He has a 401k that allows rollovers at age 59 ½. The client wants to move the funds to two IRAs with two different providers. Do the new rollover rules come into play since that would involve a partial rollover from the same 401k to different IRAs on separate days?

A. The new IRA rollover rules provide that an indirect rollover from one IRA to another IRA can be done only once per year per IRA owner. Thus, if the participant has multiple IRAs, and does an indirect rollover from one of his/her IRAs, another indirect rollover IRA to IRA is not permitted from another one of the IRAs within the 12-month period. To avoid this issue, IRA owners can simply choose to do the IRA- to-IRA rollovers via direct trustee-to-trustee transfer. However, rollovers from employer sponsored plans, such as the 401(k) are not limited to the "once each 12-month" rule.