IRA rollover rules

Many U.S. expats have IRAs. Starting in 2015 the IRS will only allow one IRA roll over per year from an IRA to an IRA. In this case a “rollover” is specifically defined as withdrawing funds from an IRA and holding them for less than 60 days then depositing them into a new IRA. While it is rare to do this more than once a year it has been used in some advanced tax and income planning to minimize borrowing cost for generally high net worth business owners. And occasionally due to unforeseen circumstances. If however a person does a transfer directly between IRA accounts and never holds the funds these transfers are unlimited.

The penalty for making more than one rollover per year is steep as the second withdrawal is treated as taxable income and a 6% excise penalty is paid on the reinvestment if it exceeds the IRA contribution limits for that year.

If you are looking at doing any type of rollovers it is best to discuss your options for tax planning with us, qualified expat investment advisers at James@aitaxadvisers.com