Understanding The One Rollover Per Year Rule

This particular rule is one that can really cause you a lot of problems – and there’s no reason to run into problems with it, if you plan ahead and do things right.

One of the big reasons why this rule can cause so much heartache is because there is no way, procedurally, for the IRS to grant an exception, no matter what the circumstances are.  For example, in the 60-day-rollover rule, often the IRS may be in a position to grant an exception, especially if something awful happened to make you miss the deadline.  This sort of exception is not even a consideration for the One-Rollover-Per-Year rule. It just can’t be done.

Key Features of the One-Rollover-Per-Year Rule

You are allowed to roll over funds from one IRA or Qualified Retirement Plan to another, that’s a given… but you’re limited in how often you can do this, if you use the 60-day-rollover.  A 60-day or indirect rollover is when you take distribution from an IRA in the form of a check (or a deposit into a non-IRA account), and then within 60 days you deposit the funds into another IRA (or back into the same IRA).

The other way to rollover funds between IRAs, the preferred method, is called a trustee-to-trustee or direct transfer, where you don’t actually receive a check – the transfer is done between the first IRA and the second IRA, with no one else handling the money in between.  There is no limit to how many trustee-to-trustee rollovers you can do per year.

FYI, the IRS doesn’t even refer to these direct transfers as rollovers, generally speaking – they call them trustee-to-trustee transfers.  The “R” word is generally reserved for the indirect, 60-day type.

So – if you use an indirect rollover to move funds from one IRA to another, you now have limited yourself, with regard to those two IRAs.  You cannot rollover money from either IRA to any other IRA for 12 months – actually 365 days, 366 in leap years.

How about an example to ‘splain this a little better?


Situation 1: You have 3 IRAs: IRA A, IRA B, and IRA C.  There is $100,000 in each account. You wish to move half of the money from IRA A into IRA B.  If you take a withdrawal from IRA A of $50,000 and receive a check for it, you can then deposit the check into IRA B within 60 days, and the rollover is complete.

At this point, you cannot rollover any the remaining $50,000 in IRA A into IRA B or IRA C for 12 months.  You furthermore cannot rollover any of the current $150,000 that is now in IRA B into IRA A or IRA C for 12 months.  What you could do is rollover any amount you wish from IRA C into either IRA A or IRA B –  as long as IRA C hasn’t been involved in an indirect rollover within 12 months.

Situation 2: Same situation as above, except that you do a direct, trustee-to-trustee rollover of $50,000 from IRA A to IRA B.  You are not limited at this point for making any other move with the funds in any of your IRAs.  You could rollover the same $50,000 back into IRA A from IRA B if you wanted using either method, but the indirect rollover would put you back into the limit mode described above.  You are free to make any rollovers you wish at this stage, since you used the trustee-to-trustee transfer.

Situation 3: Same facts as in Situation 1 above, except that you change your mind about the rollover a week after you requested the check from IRA A, and you deposit it back into IRA A (without ever depositing into IRA B).  Regardless of the fact that you’re back where you started, this action is considered a rollover.  This has now limited your ability to successfully rollover any amount from IRA A for a period of 12 months.  The other IRAs are unaffected.

Situation 4: This one will be more complex, showing what might happen if you aren’t paying attention.  Same starting facts as the others. You do an indirect rollover of $50,000 from IRA A to IRA B on September 1, 2010.  So far so good.  But then, you decide you want to rollover the remaining $50,000 from IRA A into IRA C, and you do this on December 1, 2010.  Then in January of 2011, you figure out that what you’d really like is to rollover all of the funds from IRA C into IRA A instead, so you take the distribution of $150,000 from IRA C and deposit into your IRA A account within 60 days.

What is going to happen?  Well, if all of those things happened and none of the custodians stopped you, you would have to pay tax on a distribution of $50,000 (plus any growth on that amount) from IRA A in 2010.

Since the rollover of $50,000 from IRA A to IRA C was within the 12 month period, this would be considered a disallowed rollover and therefore a taxable distribution.  Since you pulled the money out before taxes were due, there is no additional consequence for your 2010 actions.  If you had waited until after April 18, 2011 you might have had to pay an additional 6% excess contribution tax on the $50,000 disallowed rollover, since this would be considered a regular contribution to IRA C.

But part of the rollover from IRA C to IRA A, the amount less than the disallowed excess contribution and any associated growth, would be allowed as a completed rollover.  Remember the prohibition is on rollovers from the involved accounts, and since IRA C had not been involved in a valid rollover within 12 months (since the rollover from IRA A had been disallowed), this amount is a valid rollover.  You’d still have to pull out the $50,000 (plus growth) from IRA A to avoid excess contribution tax.

In all of the situations above where the distribution became taxable, there could also be the 10% early distribution penalty applied unless one of the exceptions is met.


So – what’s the lesson here?  Never, ever, ever do a 60-day rollover unless there is some mitigating circumstance that requires it.  And if you have to do the indirect 60-day rollover, make sure that you mind your p’s and q’s with the accounts involved, so that you don’t get hung up on the one-rollover-per-year rule.  Often, the IRA custodian will step in and explain the prohibition to you, but not always, and they’re not responsible for your actions.  If you do this and they let you get away with it, the entire tax bill is yours and yours alone.

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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  • Can you clarify what to do about the following situation: indirect rollover with what was listed as a single account number but money in 2 different funds within that company. Indirect rollover was distributed as 2 checks (1 from each fund), and rolled over into a single ira account within 60 days. 2 line items showed up on the 1099-r with account numbers that I thought were the same, now with a new 3 digit suffix number that is different by 1. Does this violate the one indirect rollover per year rule?

    Thank you.

  • My wife had two Traditional IRA accounts, one at a bank and the other at a credit union. She wanted to combine the two accounts so she closed the IRA at the bank and told them she was going to roll it over into a new account at the credit union. They gave her a check payable to herself and didn’t withhold any taxes. She went directly to the credit union and opened a new traditional IRA money market account. When the existing Traditional IRA term account matured, the credit union transferred the Traditional IRA money market account to the Traditional IRA term account. Is that a proper way to combine the two IRAs and is it considered to be a trustee-to-trustee transfer?
    Thank You

    • The first distribution (from the bank) would not be a direct rollover, but when the term matured and the credit union transferred everything to a new term account, this should have been a direct transfer. She’s restricted from any other non-direct transfers for a year after the distribution from the bank due to the one-rollover-per-year rule.

  • Question: I did a 60 day, $50,000 indirect rollover, classified as a premature distribution from Trowe on Dec 1st. This made the full repayment to a new retirement account due Feb 1st. On Jan 20th, I deposited $40,000 into the new retirement account. On Jan 30th, I deposited the remaining $10,000 into the same retirement account. To confirm, though paid on two dates, all $50,000 was indirectly rolled over from Trowe to the new retirement account within the 60 days. Now the new requirement account is balking at the 2nd payment, saying it can’t be done as two payments, even though within 60 days.

    I did this before, no issue. Any suggestions on how to handle? Or documentation to provide to the new retirement account?



  • Hi,Jim, my relative recently took distributions from one IRA account, one transaction happened in the first week of Nov and anohter 2 transactions happened in Mid Nov (same day). He’s now wanting to put back (or rollover) ALL the money he took from these distributions to ONE new IRA Account within 60 days to avoid penalty/taxes.
    1. Does the rollover count as one rollover even though 3 transactions took place?
    2. Let say he receive three form 1099-R, can he file form 5329 or 8606 to explain the case and get rid of the penalty/tax?
    3. Should he choose to roll over the “highest amount” (out of the 3)?
    Please advise. Appreciate much!

    • With strict interpretation of the rules, only one of the outbound transactions could be rolled back in. If that ends up being the case, the largest should be the best choice, as it would result with only the lower amounts being taxed/penalized. Your relative should talk to the custodian to see how they suggest handling this to avoid the tax and/or penalties. It may be possible to put it all back – work with the custodian on it.

  • Hi, I withdrew funds from IRA A. I’m now planning to withdraw from IRA B using trustee to trustee to put back fund I withdrew from IRA A. Can this be counted as depositing back the funds I originally withdrew from IRA A?

    Thank you

    • I don’t think this will be an issue for you since you don’t have a 60-day rollover prior to this action. The end result however, will be a taxable distribution unless you have other funds that you’ll add to the rollover amount to make it all whole.

      Here’s how it will work – you have two IRAs (A and B), both with $200 balances, $400 total.

      You withdraw $100 from IRA A, leaving a balance of $100.
      IRA B transfers $100 to IRA A. Now IRA A has a balance of $200, but IRA B has a balance of $100.

      You still only have $300 in IRAs, when you started with $400. This means that you have a taxable distribution of $100 unless you add $100 more to one of your IRAs within the 60-day window from the original distribution from IRA A.

  • If I take money from my IRA in December, does it need to be paid back by December 31st to be considered a roll-over? Or can it be paid back in February before the 60 days and still avoid taxes on the amount?

    • As long as you’ve re-deposited the money before 60 days has passed you are in good shape for a rollover, regardless of whether the calendar turned to a new year. You’ll want to document the process to make sure you don’t get caught in a tax problem if you can’t prove that you finished the rollover.

  • I am 64 and retired October 1, 2015. I have 2 401k’s. I have received a check from one of my former employer payable to the bank for the benefit of me which I need to deposit to a traditional IRA.
    I have completed the distribution form for the other 401k from the other employer as well and requested the funds be sent to the bank for benefit of me . My question is since the checks are from two different companies can I open a traditional IRA with the funds that were received from the first company and when the check is received from the second employer can those funds be deposited into the same traditional IRA?
    I am not making a withdrawal for any of the funds at this time.


  • Hi Jim,

    I had two CDs in my IRA account, and I was given two checks to roll over to the next institution. I’m going to roll them over to the same institution. My question is since I received two checks for the payout, does that count as one rollover or two?

    If it counts as two, is there anything I can do to fix the situation? I just got the checks today, but have not deposited them yet.

    Thanks so much,

    • It depends on how the original institution codes the 1099R for the distributions. If they show it all on one 1099R, then it’s only one rollover. If they show this as two distributions (not direct transfers) then you might have a problem. At this point you should talk to the original institution about it. If necessary you might have them re-issue the checks as payable to your new institution on your behalf – this would be a direct transfer instead of a rollover.

  • I have a Bank IRA with Regions. There were 8 CD’s in the IRA. I did an indirect rollover for the entire acct. They combined all the cd’s into one check and I deposited the cd into my new IRA at another institution the next day. The bank said they would send out one 1099r coded as a distribution, but that all cd numbers would be listed in the IRA. IS this considered one roll over or eight?

  • Not knowing about 2015 rollover IRA rule I rolled over my IRAs for better rates to new banks. In all
    instances banks issued me a checks in my name, which in 2 days I deposited in new IRA.
    I did not have use of the money and I did not deposited them into my checking account. Nobody in the banks informed me about any other way of transferring the money.
    I am 77 old widow and paying now 4 times higher taxes than usual is a real hardship for me.
    What can be done to avoid this?
    This new rule is real retiree trap.
    Please help.

    • Unfortunately after the fact there’s nothing that can be done to help.

      In the future, instead of taking a distribution in the form of a check, have the institution directly transfer the funds from the current account to the new account. This will avoid the problem you’ve described.

  • Unaware of the rule, I rolled over an IRA with about $2250 from one bank to another, my second rollover within a year. $2,000 is the original contribution in tax year 2010 and the $250 is interest.

    Is this “improper” rollover considered to be a distribution and contribution, meaning I would pay taxes/penalties on the interest?

    And would the $2250 be considered an “excess contribution” subject to the 6% tax? I saw this on several tax sites and was concerned. I am well below the $5,500 maximum and do not intend to contribute anything to an IRA the rest of the year.

    • The second “rollover” will be considered a taxable distribution to you (tax paid on the full amount) plus an early distribution (10% penalty) if you’re under age 59 1/2. Then it will be considered a contribution to the other IRA, and as long as you don’t contribute more than the annual minimum and you have income to support it, there should be no excess contribution penalty.

  • Question: I took a distribution in 2015 in the amount of $80,000. on Mach 26th. All was returned in the form of a rollover contribution by May 18th. The amount was deposited in two separate transactions. One for $50,000. on May 30th and one for $30,000. on May 18th. Is this a tax exempt transaction?

    Additionally, I took a normal distribution of $15,000. in January 2015 which is my usual annual distribution and it is not replaced as a rollover contribution. Appreciate your time, Laura

  • My question is about the new regulations dealing with IRA rollovers. The IRS now allows only one IRA rollover per year (transfers direct from one trustee to another don’t count).

    Is the following considered one rollover?
    1. Take a distribution from an IRA
    2. Thirty days later take a second from the same IRA acct
    3.Before 60 days elapse after the first distribution I rollover the total amount taken in both step 1 and 2 into a single IRA (could be the same IRA that was the source of the distributions or it could be a different one if that matters).

    Is this a single rollover per the IRS regs?

  • Oh my goodness! You had me for a while there….up until scenario 4. This is a little hard for me to follow. What is the real motivation this Neo Nazi government has in forbidding access to our own funds? Isn’t it that the monies don’t exist except on paper….or more correctly in cyberspace? How did this regulation occur and I only now received notification from my banking institution? This tempts me to immediately remove all monies from these retirement accounts. At the current rates of interest I no longer have any motivation to hang on to them. I will heed your advice and limit them to one a year. I do find the entire thing very distasteful, but appreciate your explaining this. I wonder how many poor people will get taken by these rats in Washington. I read of the government plan to fleece the populace, dismissed it as radical conspiracy theorism, but only now am starting to believe it. God Bless the late, great US of A. She was once a great democracy apparently no longer is!

  • I am retiring from my company and have over 250K in my 401K. I want to split it into 2 IRAs with two different banks so they are protected under FDIC insured guidelines. Do you know if this acceptable under the “one per year” rule, or would this be considered two transactions, forcing one to be taxed immediately?

    Thank You

  • Hi Jim, I have a question. I am transferring money between IRAs. The current Custodian will not directly transfer the money but will make the check payable to the new trustee. So I will physically receive the check and then mail it to the new trustee but it is not payable to me. Is that considered a roll over or a direct transfer? Just trying to figure out if I have to wait a year to do anything else with this account.
    Where I get confused is that most examples of a check state they are made out the person which I understand but there are not examples of making a check out to the new trustee.



  • I removed money from IRA in month of December and put the money back in Jan within 60 days.
    So what should I do while filing taxes ? As my IRA company shows the amount as taxable income for the year of 2014 in 1099-R. How will IRS know I have deposited the money back when I file taxes ?

  • Gary,

    Direct transfers are not limited, from any tax-deferred source to any tax-deferred destination. No trustee-to-trustee transfer will trigger a one-rollover-per year rule. You can make as many trustee-to-trustee transfers into and out of any IRA account as you like, as often as you like, with no limit.

    Hope this helps –


  • Jim,

    I guess what I’m not clear about after reading IRS Pub 590 are 401k transfers from employers to a IRA any different than IRA to IRA transfers when using trustee to trustee transfers when it comes to the one per year rule. In other words three “direct” 401k transfers in the same IRA is not a violation of one per year rule if they are direct trustee to trustee.

  • Jim,

    Does a direct rollover (trustee to trustee) into an IRA count the same as a indect rollover which starts the one year rule. In December 2011 I moved a 401k into this IRA but would like to move two more into the same IRA. I did receive a 1099r with a G in box 7. All moves will be trustee to trustee no checks made out to me. Can I use the original IRA for all three 401k’s in one year.

  • Dan –

    The rule is one indirect rollover per year, per account, both distributing and receiving.

    So in other words, if you had two IRAs and you distributed them both, then deposited each of the distributions into two new IRAs, you should have no problem. If you distributed one of the IRAs and deposited it into a new IRA, and then later distributed another IRA you could not deposit the second distribution into the new IRA within 12 months of the first deposit.

    Hope this helps –


  • Jim,

    I had 2 IRA variable annuities that had come due last week and cashed them both out to prevent any market loss during a transfer. I opened 2 accounts for different guarantee purposes yesterday, and I wrote 2 checks, 1 to each company, of the entire amount distributed, to both new companies. I have heard “one indirect rollover per year, per person” and I have heard “one indirect rollover per yer, per account.” Which is true? I won’t be moving this money again period, as they were payment guarantee accounts for my retirement, am I ok with the IRS?

  • John,

    There are no age limits on rollovers, to the best of my knowledge, so you can do what you wish – adhering to the one-rollover-per-year rule, of course.

    On your February 2012 withdrawal, if you complete the rollover within 60 days you will not owe tax on the distribution. Otherwise, you would ultimately owe tax on that transaction when you file your return in April of 2013.


  • Hi Jim,
    1. I’ve been over 70 and 1/2 for several years and recently read that I should not have been rolling over traditional IRAs either directly or indirectly. Is this correct?
    2. In an attempted rollover from a bank IRA in Feb. 2012 I have received the check in my name but not rolled it over yet. There were no taxes withheld – how soon do I owe taxes on this?

  • Hi Jim,

    I lost my job last year and did a direct rollover from my employers pension plan into a local bank ira. The check was made out directly to the bank and was deposited into a new ira. I then had to borrow funds from that ira, but was able to replace the funds within 60 days (rollover) into same ira. Was that ok ? If I am understanding this right, I only did one rollover because the original funds came from employer pension plan and was also direct. I never cashed the check. The bank wasn’t sure if it counted as 2 rollovers within one year because when I opened the IRA, they coded it as a rollover from my employer. Thanks Tarrie

  • Thanks for you prompt reply. My tax prep agent says the same as you. Read somewhere that because the 401k direct rollover is actually a cash dispersion, it invokes the 1 year rule. However my tax agent said its all about the funds moving into my possession. In this case, the funds moved directly into the ira from trustee to trustee. This is also evidenced by my 1099-r, with code G in the correct box. Thanks again for your attention.


  • Rick,

    You can do as many direct rollovers (where you don’t touch the money) as you like, but only one indirect rollover (where the money goes into your possession outside of the qualified accounts) per 12 months. Once you’ve done an indirect, either into or out of an account, you can’t do any direct rollovers into or out of those accounts for 12 months either.

    Sounds like from your description that you are okay.


  • In 2010 I did a 401k transfer to an Ira. It was a direct rollover, never touched funds. I then did an Ira to Ira rollover from the above ira to another ira within the same year. Was this a violation?

    Thanks Rick

  • Leroy –

    If you simply take a distribution from the IRA, you will only owe tax and penalty (if under age 59 1/2) on this additional distribution. The other distribution was a qualified rollover, as you’ve described, so no penalty or tax is owed there.

    You will not be eligible to rollover the amount of this more recent distribution since it’s been less than a year from your last rollover.


  • Hi Jim,

    I took $10K out of my IRA in March 2011 and replaced it within the 60 day roll-over period. It’s been less than a year, but I really need to pull some money out, I know I will have the taxes and penalty on this next withdrawal. Will I also owe taxes and a 10% penalty on the $10K
    from earlier in the year?

    Thank you for a very helpful website!

  • Thanks Jim,

    the IRS pub wasn’t too clear on multiple “into” transactions. They were clear on multiple “from” and the fact that once you put money “into” an account you cannot take any out for 12 months.

    I will get the 3 checks from the 3 banks and put all 3 into the borkerage acct. and then not do anything with any of the accounts for at least 12 months.

    I must say that in all of my searching the Internet your explanation was the most clear and precise. Some of the advice from attorney sites was outright wrong.

    So thank you again for having this great site.

    best to you in the new year…wally

  • Wally, if you do your rollovers directly to the brokerage by a trustee-to-trustee transfer, you will have no limits on your accounts.

    Otherwise, if you receive a check as a distribution from each of the IRA CDs and simply deposit the check with the brokerage as a rollover, then you’ll be limited as you described.


  • Thanks for the great explanations.

    I have 4 IRA CDs maturing at 3 different banks and I want to indirectly roll over all 3 into my IRA at a brokerage firm.

    From you examples I think I can do this as long as I don’t try to roll over any money FROM the brokerage IRA for 12 months AND as long as I don’t rollover any more money FROM the banks for 12 months. I think this is similar to your example 1 except I have A, B, C and D with the brokerage being B

    So, bottom line: from A to B, from C to B and from D to B then no FROM transactions for A,B,C or D for 12 months.

  • what if i have 4 ira account
    can i take money from each account put it back within
    60 days in the same account that will make indirect rollover 4 times within 12 months is that ok ?

  • Unfortunately, Harsh, this is one rule that the IRS has no leeway to waive. As with all of these kinds of transactions, the institution has no responsibility to ensure you’re doing things correctly. It sounds as if your IRA is disqualified and tax is likely due for 2010 on the amount of your transfer(s).

    Hope everything works out okay for you…


  • Hello Jim:

    I took more than 3 or 4 times during 2010 “60-day or indirect rollover” distributions and deposited back in the same IRA account within the 60 Day window each time. I just found out about the “Once per 12 month rule” about such distribution. My question, is it possible to get a waiver from IRS from being considered as a taxable income due to my ignorance of the rule? The custodian institution did not stop me putting the money back with 60-days more than once in a 12 month.


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