September 4, 2017 1:55 am

IRA Distributions from Failed Banks not Subject to One-Rollover Limit

Generally, if you take a distribution from an IRA, you can avoid tax (including the 10% early distribution penalty if under age 59½) by rolling it over to another IRA or qualified retirement plan within 60 days. However, you can only make one rollover every 12 months. The IRS recently explained that this one-rollover limit does not apply to distributions from failed banks where the FDIC has been appointed receiver and there is no acquirer for the bank (IRS INFO 2017-0018). The reason: The taxpayer did not initiate the distribution.

The one-rollover-per-year limit does not apply to:

  • Distributions from qualified retirement plans rolled into IRAs
  • Rollovers or direct transfers from traditional IRAs to Roth IRAs, which are treated as taxable conversions except to the extent that after-tax contributions were made to the traditional IRA.
Tax Glossary

Capital loss carryover

A capital loss that is not deductible because it exceeds the annual $3,000 capital loss ceiling. A carryover loss may be deducted from capital gains of later years plus up to $3,000 of ordinary income.

More terms