IRA guru Ed Slott is warning advisors to notify their clients of the recent tax court ruling that says IRA holders can do only one IRA-to-IRA rollover per year, which runs counter to the IRS interpretation of the tax code.
The recommended way to move money from IRA to IRA is via direct transfers, where the money goes directly from one IRA to another—and the holder doesn’t touch the money.
However, in the Jan. 28 tax court decision, the petitioners were transferring money from IRA to IRA using indirect rollovers, where the money is payable to the IRA holder, but the money has to be put back into another IRA within 60 days.
“Too many people do this” IRA-to-IRA rollover, Slott told ThinkAdvisor.com.