What Rules Are Involved in IRA Transfers?


Quick Answer

One rule regarding an IRA, or individual retirement account, transfer is the 60-day rule, where the money must be transferred from one IRA to another or the IRS considers the money ordinary income, according to Investopedia. Another rule is the one-year rule, where assets cannot be rolled over into the same IRA within a year.

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Full Answer

Another rule regarding IRA transfers is a person is allowed to make tax-free rollovers from his IRA at any age, but if he is 70.5 or older, he cannot roll over his annual required minimum distribution, or RMD, because a rollover of an RMD is considered an excess contribution, says Investopedia.

Another rule that surrounds IRA transfers is the same property rule. With this rule, if a person rolls over money from one IRA to another IRA, the rollover must consist of the same property. What this means is the person cannot take cash distributions from his IRA, purchase other assets with the cash distribution he received, and then roll those assets over into a new IRA or the same IRA, explains Investopedia. If this were to occur, the Internal Revenue Service considers the cash distribution the person received from the IRA as ordinary income.

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