William Penn Life, 2014 (49. évfolyam, 1-12. szám)
2014-12-01 / 12. szám
Annuity Essentials by Debbie Evans ‘One-rollover-per-year’ rule for IRAs to change in January A rollover is when IRA proceeds are paid to the IRA holder (that is, the check is made payable to the IRA holder). The IRA holder then deposits (or reinvests) the IRA distribution that was received. The IRA holder generally has 60 days after the day he receives the distribution to complete the rollover by depositing the distribution into an IRA. Current Law Under current law, an IRA owner is allowed one such rollover per one-year period for each of his or her IRAs. You do not have to include in your gross income any amount distributed to you from a traditional IRA if you deposit the amount into another (or the same) traditional IRA within 60 days (Internal Revenue Code Section 408(d)(3)). Treasury regulations published in 1981 and IRS Publication 590 interpreted this limitation as applying on an IRA-by-IRA basis, meaning a rollover from one IRA to another would not affect a rollover involving other IRAs owned by the same person. U.S. Tax Court decision The IRS recently announced that it is changing its interpretation of this requirement to follow a recent U.S. Tax Court ruling (Announcement 2014- 15). Beginning as early as Jan. 1, 2015, when the IRS applies its new interpretation, a taxpayer will be limited to one rollover per 12-month period, regardless of how many IRAs he or she owns. The court recently held that you can't make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding one-year period. This decision means: • You must include in your gross income any previously untaxed amounts distributed from an IRA if you made an IRA-to-IRA rollover in the preceding 12 months, and • You may be subject to the 10 percent early withdrawal tax on the amount you include in gross income. Additionally, if you pay these amounts into another (or the same) IRA, they may be: • excess contributions, and • taxed at 6 percent per year as long as they remain in the IRA. The IRS intends to follow the tax court's interpretation. However, to give IRA owners and trustees time to adjust, as mentioned above, the IRS will delay implementation until Jan. 1, 2015 at the earliest. Only rollovers will be affected The "one-rollover-per-year" rule applies only to rollovers. This change will not affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer is not a rollover. And finally, whatever you seek to accomplish with your investments, we recommend that you contact your tax specialist for guidance. □ Debbie Evans, FIC, is WPA's annuity specialist. You can reach Debbie at 1-800-848-7366, ext. 127, or by email at devans@williampennassociation.org. To learn more about qualified and non-qualified annuities and how a William Penn Association tax-deferred annuity can benefit you and your financial future, contact your local WPA representative or our Home Office toll-free at: 1-800-848-7366 December 2014 0 William Penn Life Photo © Can Stock Photo Inc./focalpoint
