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Wealth Management

What is the one-rollover-per-year rule?

When you receive an IRA distribution that is payable to you, you can roll over the money to another IRA within 60 days and avoid paying taxes on the distribution or incurring the 10% federal income tax penalty for an early withdrawal. However, you aren't allowed to make another tax-free (60-day) rollover for 365 days.

For two decades, the position of the IRS was that this rule applied separately to each IRA, so someone with multiple IRAs was generally allowed to make more than one rollover in a 12-month period. But since 2015, after a U.S. Tax Court ruling contradicted the IRS position, the agency has applied the rollover rule on an aggregate basis to all IRAs an investor owns — traditional, Roth, SEP, and SIMPLE. Thus, if you make a 60-day rollover from a Roth IRA to the same or another Roth IRA, you will be precluded from making a 60-day rollover from any other IRA — including traditional IRAs — within 12 months. The converse is also true — a 60-day rollover from a traditional IRA to the same or another traditional IRA will preclude you from making a 60-day rollover from one Roth IRA to another Roth IRA.

In general, it's best to avoid 60-day rollovers if possible. Use direct (trustee-to-trustee) transfers — as opposed to 60-day rollovers — between IRAs, because direct transfers aren't subject to the one-rollover-per-year limit. The tax consequences of making a mistake can be significant — a failed rollover will be treated as a taxable distribution (with potential early distribution penalties if you're not yet 59½) and a potential excess contribution to the receiving IRA.

This presentation is not intended as tax, legal, investment, or retirement advice or recommendations.

This content has been reviewed by FINRA.

Prepared by Broadridge Advisor Solutions. © 2025 Broadridge Financial Services, Inc.
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10/8/25