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
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Read Before You Sign: IT Contract Pitfalls Every NJ Business Should Know
In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
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!
