One-Rollover-Per-Year Rule

The one-rollover-per-year rule, from Internal Revenue Code section 408(d)(3)(B), permits an individual only one tax-free 60-day rollover between IRAs in any 12-month period. Following the Tax Court's decision in Bobrow v. Commissioner, the IRS applies the limit on an aggregate basis across all of a person's IRAs combined, rather than allowing one rollover per separate account.

Before 2015, the IRS's own guidance and Publication 590 applied the limit IRA-by-IRA, so a person with three IRAs could, on that reading, do one rollover from each of them in the same year. The Tax Court rejected that reading in Bobrow v. Commissioner, T.C. Memo. 2014-21, holding that section 408(d)(3)(B) applies on an aggregate basis: a person can make only one nontaxable 60-day rollover in a 12-month period, full stop, no matter how many IRAs they own. The IRS announced it would follow Bobrow (Announcement 2014-32), applying the aggregation rule to distributions occurring on or after January 1, 2015, and current IRS Publication 590-A confirms the rule aggregates "all of an individual's IRAs (whether traditional, Roth, or SIMPLE), effectively treating them as one IRA for purposes of the limit."

The 12-month period is not the calendar year. It runs from the date the distribution being rolled over was received, so a rollover completed in October of one year blocks another 60-day rollover until October of the next year, regardless of which tax year that spans. A rollover from IRA-1 to IRA-2 also blocks a later rollover out of IRA-2 itself within that same window, since the aggregation rule follows the person, not the account.

Two categories of movement are excluded from the limit entirely, and understanding why clarifies what actually counts. A conversion, a rollover from a traditional IRA to a Roth IRA, is not subject to the limit and is disregarded when applying it to other rollovers; the IRS distinguishes conversions from the traditional-to-traditional and Roth-to-Roth rollovers the aggregation rule targets, though a Roth-to-Roth 60-day rollover still counts and can block a later traditional-to-traditional rollover within the same window, and vice versa, since both draw on the same aggregate limit. Rollovers to or from an employer's qualified plan are excluded as well. And trustee-to- trustee transfers between IRAs are not rollovers at all under the tax code, so they're not limited by this rule, or by any similar frequency limit; that's exactly the workaround trustee-to-trustee transfer covers in full.

The consequence of exceeding the limit is not a warning. If a second 60-day rollover in the same 12-month window is attempted, the amount isn't treated as rolled over: it becomes a taxable distribution (with the 10% additional tax if the person is under 59½), and depositing it into an IRA anyway can create an excess contribution subject to its own 6% excise tax until corrected.

Checking whether a planned 60-day rollover is allowed means asking one question: has this person completed any other 60-day IRA-to-IRA rollover, from any of their IRAs, in the preceding 12 months? If yes, the new one is blocked regardless of which IRA it involves, unless it's a conversion, a rollover to or from a qualified plan, or a trustee-to-trustee transfer.

A hypothetical example. Naomi owns two traditional IRAs, IRA-1 and IRA-2, and a Roth IRA. In April, she takes a distribution from IRA-1 and rolls it into IRA-2 within 60 days. In November of the same year, needing to move money out of her Roth IRA, she asks for another 60-day rollover. Because the aggregation rule counts all of her IRAs together, the November transaction is blocked; her one rollover for the 12 months following April was already used in April, even though the Roth IRA was never involved in that first rollover. Had Naomi instead requested a trustee-to-trustee transfer for the Roth money, or converted it to a new Roth IRA, neither would have been affected by the April rollover at all.

What the rule is meant to prevent

• Stops the 60-day window from being used as a series of short-term, interest-free loans to oneself by rolling the same or different money repeatedly within a year.
• Aggregating across all IRAs closes the obvious workaround of simply opening more accounts to get more free 60-day windows.
• The exclusions for trustee-to-trustee transfers and conversions preserve unlimited flexibility for the transactions that don't create the risk the rule targets.

Where it causes real problems

• The aggregate limit is easy to violate by accident, since it's easy to forget that a rollover from one IRA blocks a rollover from a completely different one for the rest of the 12-month window.
• The consequence, an unplanned taxable distribution and possibly an excess contribution, is serious enough that most advisors recommend avoiding 60-day rollovers whenever a trustee-to-trustee transfer will do the same job with no limit at all.
• The 12-month window, rather than the calendar year, makes the rule harder to track without writing the exact date down.