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
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
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.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
