The IRS has made a ruling on IRA rollovers in order to close a loophole ruled on earlier this year.
In January, a U.S. Tax Court judge ruled that the actions of tax attorney Alvan Bobrow and his wife were not allowed under the Internal Revenue Code, according to Pacifica Wealth Advisors. In 2008, the couple made a series of withdrawals and transfers among contributory IRAs, rollover IRAs and non-IRA investment accounts, keeping within the 60-day deadline for tax-free IRA rollovers. In effect, Bobrow and his wife were able to use this strategy to use their multiple IRA funds to obtain interest-free loans. Because they were keeping within the 60-day period, the couple assumed at the time that this was permissible by the IRS.
The ruling in the U.S. Tax Court case Bobrow v. Commissioner, T.C. Memo 2014-21 prompted the IRS to tighten IRA rollover rules, limiting taxpayers to one tax-free rollover of any part of a distribution from a single IRA to another IRA within a 365-day period, according to the news source. This rule goes into effect January 1, 2015.
According to the Journal of Accountancy, the IRS has stressed that this rule – which is actually a new interpretation of Sec. 408(d)(3)(A)(i) – will not affect IRA owners’ ability to transfer funds from one IRA trustee to another. Indeed, these transactions are not considered rollovers under Rev. Rul. 78-406, and so are not subject to the one per 365-day period limit.
As Pacifica points out, this decision makes things a little bit more complicated in some situations, such as for taxpayers who own both traditional and Roth IRAs. In any case, there is likely to be more scrutiny of IRA rollovers starting next year.
As professionaltax, trust, and estate attorneys, we often write about current matters regarding the IRS at Tax, Trust & Estate News. Check out some of our previous posts:
IRS Chief: U.S. Can’t End Corporate Inversions
IRS Extends Estate Tax Break
IRS Postpones Beginning of Tax Season For the Second Time
IRS Budget Constraints May Harm Taxpayers, Advisory Council Warns
TIGTA: IRS Ill Prepared For Offshore Tax Evasion Law
U.S. Supreme Court Sides With IRS in McCombs Tax Shelter Penalty Case
IRS to Focus Attention on Small Business Partnerships
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
IRS: One IRA rollover per year as of 2015
Author: James F. McDonough
The IRS has made a ruling on IRA rollovers in order to close a loophole ruled on earlier this year.
In January, a U.S. Tax Court judge ruled that the actions of tax attorney Alvan Bobrow and his wife were not allowed under the Internal Revenue Code, according to Pacifica Wealth Advisors. In 2008, the couple made a series of withdrawals and transfers among contributory IRAs, rollover IRAs and non-IRA investment accounts, keeping within the 60-day deadline for tax-free IRA rollovers. In effect, Bobrow and his wife were able to use this strategy to use their multiple IRA funds to obtain interest-free loans. Because they were keeping within the 60-day period, the couple assumed at the time that this was permissible by the IRS.
The ruling in the U.S. Tax Court case Bobrow v. Commissioner, T.C. Memo 2014-21 prompted the IRS to tighten IRA rollover rules, limiting taxpayers to one tax-free rollover of any part of a distribution from a single IRA to another IRA within a 365-day period, according to the news source. This rule goes into effect January 1, 2015.
According to the Journal of Accountancy, the IRS has stressed that this rule – which is actually a new interpretation of Sec. 408(d)(3)(A)(i) – will not affect IRA owners’ ability to transfer funds from one IRA trustee to another. Indeed, these transactions are not considered rollovers under Rev. Rul. 78-406, and so are not subject to the one per 365-day period limit.
As Pacifica points out, this decision makes things a little bit more complicated in some situations, such as for taxpayers who own both traditional and Roth IRAs. In any case, there is likely to be more scrutiny of IRA rollovers starting next year.
As professionaltax, trust, and estate attorneys, we often write about current matters regarding the IRS at Tax, Trust & Estate News. Check out some of our previous posts:
IRS Chief: U.S. Can’t End Corporate Inversions
IRS Extends Estate Tax Break
IRS Postpones Beginning of Tax Season For the Second Time
IRS Budget Constraints May Harm Taxpayers, Advisory Council Warns
TIGTA: IRS Ill Prepared For Offshore Tax Evasion Law
U.S. Supreme Court Sides With IRS in McCombs Tax Shelter Penalty Case
IRS to Focus Attention on Small Business Partnerships
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
