Can an IRA Be Rolled Over Twice?
If you want to move an individual retirement account from one trustee or institution to another, you can perform a rollover of the account. While you can let the trustee of the IRA handle this transaction, you can do this tax-free rollover on your own by requesting a withdrawal from the first IRA and then depositing the money with the second. You can roll over an account multiple times, but you must adhere to the required waiting period for rollovers.
You can complete a tax-free rollover from one IRA to another once every 12 months. This 12-month period applies to each involved IRA account. Suppose you request a withdrawal from IRA 1 of $20,000 on April 1, 2012, and you contribute this money to IRA 2 on May 1, 2012; you cannot complete another tax-free rollover to or from either account before April 1, 2013 -- 12 months from the date you withdrew the funds. Any withdrawal from either account before this one-year period is a normal distribution and subject to taxes and penalties.
60 Days to Complete
You have 60 days from the time you withdraw the funds from the first account to contribute the funds to another IRA. This 60-day time frame includes weekends and holidays, and no provisions exist in the law for any extensions. If you exceed this 60-day time frame, the amount you withdraw becomes a regular distribution, subject to any taxes and penalties that apply.
Trustee to Trustee
A trustee-to-trustee transfer is not considered a rollover if completed either by your request or a trustee's request. This transfer is not subject to the one-year waiting period for rollovers from IRA accounts.
The 60-day window to redeposit IRA withdrawals allows you to take a short-term interest-free and tax-free loan from your IRA. You can deposit the money back into the same IRA account that held the funds originally and still consider this a tax-free rollover. This rollover means the IRA is still subject to the 12-month waiting period for additional rollovers.
IRA Same Type
Be certain that you are rolling money into another IRA of the same type -- a Roth to a Roth or a traditional to a traditional. If you change the type of account, you are performing a conversion. While a conversion may be to your advantage, it also may set up a taxable event that needs to be reported correctly.
Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.