In Uncategorized on 11/14/2014 at 17:13

Roll over, IRAs. But December 31 is approaching, and the one-roll-per-year-for-each-IRA, the rule that IRS applied pre-Bobrow, is about to be, in the immortal words of Charles Edward Anderson Berry, “gone like a cool breeze”.

Remember the Bobrows and their rolling IRAs? No? Then check out my blogposts “Practicing in Tax Court Can Be Hazardous”, 1/28/14, and “Laissez Les IRAs Roulez”, 4/15/14.

Al the Tax Lawyer tried to snow Judge Nega with the proposition that, as he was a tax lawyer, his interpretation of the law had to be correct.

Al learned this does not work.

Al called in his fellow diplomates of The American College of Tax Counsel, to which august body I do not belong, to bolster his collapsing case. Judge Nega riposted in substance “S’vet gornisht helfen, boychick.” (I need not, of course, translate).

IRS, however, in an airburst of magnanimity, agreed to let the mistaken rule stand, in the immortal words of the late great William James Basie, “one more once”; this year only.

But no good deed goes unclichéd, because rollers were wondering if they did a free-kick rollover in 2014, would they be debarred from rolling again in 2015.

So IRS issued Notice 2014-32, supplementing Notice 2014-15, 2014-16 I.R.B. 973, to unconfuse those transitioning between rolls.

“However, as a transition rule for distributions in 2015, a distribution occurring in 2014 that was rolled over is disregarded for purposes of determining whether a 2015 distribution can be rolled over under § 408(d)(3)(A)(i), provided that the 2015 distribution is from a different IRA that neither made nor received the 2014 distribution. In other words, the Bobrow aggregation rule, which takes into account all distributions and rollovers among an individual’s IRAs, will apply to distributions from different IRAs only if each of the distributions occurs after 2014.” Notice, at p. 1.

Rollovers from Trads to Roths are disregarded, but Roth-to-Roth will fall within the new Bobrow rule. Only one IRA roll of whatever kind (other than Trad-to-Roth) in any year, no many how many IRAs of whatever kind you have.

And rollovers to or from qualified plans are also not covered by the Bobrow rule.

Of course, trustee-to-trustee isn’t a rollover, and Notice 2014-32 urges trustees to tell beneficiaries so. But see my blogposts “Ignorance Is Bliss?” 11/10/11 and “A Long Dry Spell”, 11/22/11. Echoing my advice from the latter blogpost,  if I were counsel to a trustee, I’d tell the client not to give any advice of any kind to beneficiaries, but have them sign an acknowledgment in blood that they relied on independent tax counsel of their sole choice and retention at their sole cost and expense.

If the client’s advice is right they gain nothing, and if wrong they get sued.

So roll your own while you can.

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