Joint Return-3 IRAs Rollover 12 Mo Period

Client has 3 three IRA s rollovers in 12 mo period.1-- Husband-SEP IRA rollover to traditional IRA 2- Husband Tradition IRA to traditional IRA.3- Wife Traditional IRA to traditional IRA. There should be no problem since 1 is a employer plan rollover to IRA. 3 I assume husband & wife can each qualify for 1 rollover in 12 mo period. Am I correct?

According to Investopedia,

"An IRA rollover is a transfer of funds from a retirement account into a traditional IRA or a Roth IRA. This can occur either [1] through a direct transfer or [2] by a check, which the custodian of the distributing account writes to the account holder who then deposits it into another IRA account."

Question: Are your clients' rollovers direct transfers or are they the other kind?

They are not trustee to trustee transfers. Client got check in his name & rolled over in another institution

https://www.irs.gov/retirement-plans/ira-one-rollover-per-year-rule

Beginning in 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own (Announcement 2014-15 and Announcement 2014-32). The limit will apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.

Investopedia needs to some TLC. Direct transfers, or trust to trust transfers, do not count as an IRA rollover.

Per IRS:

The one-per year limit does not apply to:

rollovers from traditional IRAs to Roth IRAs (conversions)
trustee-to-trustee transfers to another IRA
IRA-to-plan rollovers
plan-to-IRA rollovers
plan-to-plan rollovers

I would agree that a SEP is a plan rollover to the IRA. Not true.

https://www.irs.gov/retirement-plans/pl ... tributions

I have a one person SEP IRA. Have not contributed to it for a the past 3 years. My understanding is that there is no set amount, one can contribute -0- to the maximum calculated on teh Sch C profit less certain reductions, e.g. 1/2 the soc sec. adjustment to income. Is there any reason I should roll that over to a traditional IRA?

I respectably respectfully disagree Doug.

Application of One-Per-Year Limit on IRA Rollovers
Announcement 2014-32
This announcement is a follow-up to Announcement 2014-15, 2014-16 I.R.B.
973, addressing the application to Individual Retirement Accounts and Individual
Retirement Annuities (collectively, “IRAs”) of the one-rollover-per-year limitation of
§ 408(d)(3)(B) of the Internal Revenue Code.

(For purposes of this
announcement, the term “traditional IRA” includes a simplified employee pension
described in § 408(k) and a SIMPLE IRA described in § 408(p).)

I looked at that announcement, obviously too fast. Thanks Howard

This thread has been very instructive. But from a practical standpoint at this point what is the downside. Long ago I came to the realization that there are few perfect tax tax returns. Money magazine once had an annual article showing how different tax preparers came to widely different outcomes when presented with a given set of facts. If the IRS obsolete computers catch this the taxpayer will have to amend that return, pay tax on the withdrawal plus some interest. But then that rollover amount is out of the IRA will not be taxed again. I doubt that any penalty would be involved. After all, for many years the IRS "misinterpreted the law". In the first half of my career I worked for a Fortune 100 company in a position that had nothing to do with taxes. Even so I became aware of many significant questionable "deductions" that I am 99% certain were being taken. And my recollection is that there was a small team of IRS auditors dedicated to this huge corporation. No one can find all the needles in the haystack. And there were a lot of needles. Of course if preparing an initial return for that year you have to do it right. I am addressing the need to amend a prior year.

So a SEP is not considered a plan for the purpose of plan to IRA rollovers---one further question was what about the wife or spouse that she has a roll over in the 12 month period. Do each husband & wife - joint return qualify for 1 roll over during 12 mo period?
Thanks

W is ok, H is not.

They are not trustee to trustee transfers. Client got check in his name & rolled over in another institution

Just to double-check, as this is a little ambiguous...did the money spend any time in an account other than an IRA?

One rollover allowed per person - married couple gets one each under the one year rule.

A SEP is a retirement plan where the employer makes contributions to an IRA of the employee. Which is probably coded as a SEP-IRA by the custodian but it's no different from a Traditional/Rollover IRA. A SIMPLE IRA, in contrast, is a different IRA type with unique rollover rules (two-year waiting period).

Jake you also have the fallback Traditional-IRA contribution rules for that SEP-IRA. So there's the Schedule C based amount, and there's also the $5,500/$6,500 per year (self or spousal), you can do the higher one.

Question: Can a self employed taxpayer take the maximum Keogh, 401k or SEP-IRA amount, and also the $5,500/6,500 Roth IRA? I thought that was o.k. - now at my advanced age of 75 I am not so sure. Seems that I remember that when I had a day job I could take the maximum 401k AND an IRA. But when the law changed and the IRA addition was not tax sheltered I quit.