How Many Times Per Year Can an IRA Rollover Occur Without Penalty?

No taxes are withheld during a trustee-to-trustee transfer.

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You can invest your IRA money in a variety of different instruments, ranging from stocks and bonds to certificates of deposit. You also have the ability to move money between IRA accounts and custodians. Certain types of IRA transactions are subject to restrictions that limit your ability to move your funds more than once per year.


An IRA rollover occurs when you physically take possession of your IRA money and redeposit the cash into another retirement account. If you fail to complete the rollover within 60 days, the Internal Revenue Service recharacterizes your rollover as a taxable withdrawal. Under federal tax laws, you can roll over IRA funds only once within a 12-month period. The rollover restriction applies to each separate IRA account, rather than your retirement funds as a whole. Consequently, you can roll over cash held in various different IRAs at different points within a 12-month period as long as you do not move the same sum of money more than once.


You can avoid the potential pitfalls of the 60-day rollover window and free yourself from the constraints of the rollover limitations if you arrange a trustee-to-trustee transfer. In such a transfer, your current IRA custodian directly transfers your retirement cash to a new custodian. You never take possession of the money, and therefore there are no limits on the rollover timeframe. The IRS imposes no restrictions on trustee-to-trustee transfers so you can move IRA cash multiple times in this manner during a particular year.


SIMPLE IRAs are employer-sponsored retirement accounts that are subject to the same basic rules as traditional IRAs. You can arrange trustee-to-trustee transfers or rollovers of SIMPLE IRA funds. However, you cannot roll over or transfer SIMPLE IRA funds that have been invested for less than two years. If you attempt to do so, your withdrawal is recharacterized as a taxable withdrawal and subject to a 25 percent tax penalty as well as ordinary income tax. Beyond the two-year mark, SIMPLE IRA rollovers work in the same manner as traditional IRA transfers and rollovers.


Aside from tax penalties, you may also have to deal with custodial penalties when you roll over your IRA funds. Many banks assess interest penalties on CD withdrawals, while insurance firms typically impose surrender penalties on annuity withdrawals. You may also pay fees to buy and sell stocks and bonds that you hold inside your IRA brokerage account. The more frequently you roll over your money, the more fees you may have to contend with. These costs may offset some of the gains you would realize by transferring your IRA cash to a better performing investment account.