Rollover

<div class="Section1"><br /> <br /> <em>Editor&rsquo;s Note</em>: The SECURE Act 2.0 contained a new rule that expands the availability of charitable giving with retirement funds. Under the new law, taxpayers will be allowed to make a one-time qualified charitable distribution of up to $50,000 from an IRA to a charitable remainder annuity trust, charitable remainder unitrust or charitable gift annuity. To qualify, charitable remainder annuity trusts and charitable remainder unitrusts must be funded solely with qualified charitable distributions. Charitable gift annuities be funded exclusively by qualified charitable distributions and commence fixed payments of five percent or greater not later than one year from the date of funding. The new law also indexes the current limit for qualified charitable distributions to inflation for tax years beginning after 2022.A taxpayer age 70&frac12; or older is permitted to make a qualified charitable distribution (QCD) from a traditional IRA or Roth IRA that is not includable in the gross income of the taxpayer.<a href="#_ftn1" name="_ftnref1">¹</a> The exclusion for qualified charitable distributions generally is available for distributions from any type of IRA (including a Roth IRA described in Section 408A and a deemed IRA described in Section 408(q)) that is neither an ongoing SEP IRA described in Section 408(k) nor an ongoing SIMPLE IRA described in Section 408(p).<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> The provision permitting a qualified charitable distribution to be excluded from gross income was allowed to expire at the end of 2011, but the American Taxpayer Relief Act of 2012 (&ldquo;ATRA 2012&rdquo;) retroactively revived the provision for 2012 and extended it for the 2013 tax year. The Tax Increase Prevention Act of 2014 extended the provision retroactively for 2014, and the Protecting Americans Against Tax Hikes (PATH) Act of 2015 made the provision permanent.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> A qualified charitable distribution is any distribution:<br /> <ol><br /> <li>not exceeding $100,000 in the aggregate during the taxable year <span style="font-weight: 400;">(the amount is indexed to $108,000 for 2025, up from $104,000 in 2024)</span>;</li><br /> <li>made directly, in a trustee-to-charity transfer (including a check from an IRA made payable to a charity and delivered by the IRA owner to the charity);<a href="#_ftn4" name="_ftnref4">⁴</a></li><br /> <li>from a traditional or Roth IRA (although distributions from ongoing SEPs and SIMPLE IRAs do not qualify);</li><br /> <li>to a public charity (but not a donor-advised fund or supporting organization);</li><br /> <li>that would otherwise qualify as a deductible charitable contribution (not including the percentage of income limits in IRC Section 170(b) ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="739">739</a>)); and</li><br /> <li>to the extent the distribution would otherwise be includable in gross income.<a href="#_ftn5" name="_ftnref5">⁵</a></li><br /> </ol><br /> No charitable income tax deduction is allowed for a qualified charitable distribution.<a href="#_ftn6" name="_ftnref6">⁶</a><br /> <br /> If a qualified charitable distribution is made from any IRA funded with nondeductible contributions, the distribution is treated as coming first from deductible contributions and earnings.<a href="#_ftn7" name="_ftnref7">⁷</a> This is contrary to the general rule that distributions from a traditional IRA with both deductible and nondeductible contributions are deemed made on a pro-rata basis.<a href="#_ftn8" name="_ftnref8">⁸</a><br /> <br /> Qualified charitable distributions count toward a taxpayer&rsquo;s required minimum distributions ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3682">3682</a>).<a href="#_ftn9" name="_ftnref9">⁹</a><br /> <br /> <b>Planning Point:</b><span style="font-weight: 400;"> Individuals who own &ldquo;checkbook IRAs&rdquo; can make the QCD by writing a check to directly transfer the IRA funds to the charity.&nbsp; However, the check must be cashed by year-end to count toward that year&rsquo;s RMD.&nbsp; It is not enough that the charity merely receives the check.&nbsp; The funds must leave the IRA to count toward that year&rsquo;s RMD.</span><br /> <br /> The prohibition on making a qualified charitable distribution from a SEP IRA or a SIMPLE IRA only applies to &ldquo;ongoing&rdquo; SEP IRAs or SIMPLE IRAs. These kinds of IRAs are ongoing if a contribution is made for the taxable year of the charitable distribution.<a href="#_ftn10" name="_ftnref10">¹⁰</a><br /> <br /> Post-SECURE Act, taxpayers who make both post-70&frac12; (deductible) IRA contributions and take qualified charitable distributions (QCDs) are also subject to an anti-abuse rule. Future QCDs are reduced by the total amount of deductible post-70&frac12; IRA contributions that have not offset another QCD, although the amount cannot be reduced below zero.<a href="#_ftn11" name="_ftnref11">¹¹</a> Amounts that cannot be treated as a pre-tax QCD can be treated as an itemized deduction for the taxpayer.<br /> <p style="padding-left: 40px;"><em>Example:</em> An individual who turned age 70&frac12; before 2020 deducts $5,000 for contributions for each of 2020 and 2021 but makes no contribution for 2022. The individual makes no QCDs for 2020 and makes QCDs of $6,000 for 2021 and $6,500 for 2022.</p><br /> <p style="padding-left: 40px;">The excludable amount of QCDs for 2021 is the $6,000 of QCDs reduced by the $10,000 aggregate amount of post-age 70&frac12; contributions for 2021 and earlier taxable years. For this individual, these amounts are $5,000 for each of 2020 and 2021, resulting in no excludable QCDs for 2021 (that is, $6,000 &ndash; $10,000 = ($4,000)).</p><br /> <p style="padding-left: 40px;">The excludable amount of the QCDs for 2022 is the $6,500 of QCDs reduced by the portion of the $10,000 aggregate amount of post-age 70&frac12; contributions deducted that did not reduce the excludable portion of the QCDs for earlier taxable years. Thus, $6,000 of the aggregate amount of post-age 70&frac12; contributions deducted does not apply for 2022 because that amount has reduced the excludable amount of QCDs for 2021. The remaining $4,000 of the aggregate amount of post-age 70&frac12; contributions deducted reduces the excludable amount of any QCDs for subsequent taxable years. Accordingly, the excludable amount of the QCDs for 2022 is $2,500 ($6,500 &ndash; $4,000 = $2,500). As described above, because the $4,000 amount reduced the excludable amount of QCDs for 2022, that $4,000 amount does not apply again in later years, and no amount of post-age 70&frac12; contributions remains to reduce the excludable amount of QCDs for later taxable years.<a href="#_ftn12" name="_ftnref12">¹²</a></p><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect; 408(d)(8), as amended.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; Notice 2007-7, 2007-1 C.B. 395, A-36.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; The American Taxpayer Relief Act of 2012, Pub. Law No. 112-240.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; Notice 2007-7, 2007-1 CB 395.<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp; IRC &sect; 408(d)(8).<br /> <br /> <a href="#_ftnref6" name="_ftn6">6</a>.&nbsp; IRC &sect; 408(d)(8)(E).<br /> <br /> <a href="#_ftnref7" name="_ftn7">7</a>.&nbsp; IRC &sect; 408(d)(8)(D).<br /> <br /> <a href="#_ftnref8" name="_ftn8">8</a>.&nbsp; IRC &sect;&sect; 72, 408(d)(1).<br /> <br /> <a href="#_ftnref9" name="_ftn9">9</a>.&nbsp; IRC &sect; 408(d)(8), as amended.<br /> <br /> <a href="#_ftnref10" name="_ftn10">10</a>.&nbsp; Notice 2007-7, 2007-1 CB 395.<br /> <br /> <a href="#_ftnref11" name="_ftn11">11</a>.&nbsp; IRC &sect; 408(d)(8)(A).<br /> <br /> <a href="#_ftnref12" name="_ftn12">12</a>.&nbsp; Notice 2020-68.<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> Where a qualified pension or profit sharing plan distributes an ordinary annuity contract, deferred or otherwise, to a participant, the annuity contract or cash amount received on surrender of the contract may be rolled over if the distribution is an eligible rollover distribution and meets the requirements necessary for rollover of such a distribution ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3998">3998</a>).<a href="#_ftn1" name="_ftnref1">¹</a> For purposes of the 60-day rule, the distribution takes place on distribution of the annuity contract from the plan, not on its surrender or transfer to the receiving plan ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4016">4016</a>).<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect; 402(c).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; Let. Ruls. 8014034, 8035054.<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> An individual may receive a distribution from his or her traditional IRA and within 60 days roll it over into a tax sheltered annuity to the extent that the distribution would be includable in income if not rolled over.<a href="#_ftn1" name="_ftnref1">¹</a> After-tax contributions including nondeductible contributions to a traditional IRA may not be rolled over from a traditional IRA into a Section 403(b) tax sheltered annuity.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> The IRS may waive the 60-day rollover requirement if failure to waive it would be against equity or good conscience, including in the event of a casualty, disaster, or other event beyond the reasonable control of the individual subject to the requirement ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4016">4016</a>). In determining whether to grant a waiver, the IRS considers (1) certain errors committed by a financial institution; (2) inability to complete a rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error; (3) the use of the amount distributed (for example, in the case of payment by check, whether the check was cashed); and (4) the time elapsed since the distribution occurred.<br /> <br /> <em>See</em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4017">4017</a> for a discussion of the new self-certification process that can allow a taxpayer to obtain a waiver of the 60-day time limit.<br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&sect; 408(d)(3)(A), 402(c)(8)(B)(vi).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&sect; 402(c)(2), 403(b)(8)(B).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> <em>Editor&rsquo;s Note</em>: The SECURE Act now permits taxpayers to make contributions to traditional IRAs at any age.<br /> <br /> Although there was considerable confusion on this issue at one time, it now seems clear that rollovers may be made to traditional IRAs as long as the minimum distribution requirements are met ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3682">3682</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3698">3698</a>).<a href="#_ftn1" name="_ftnref1">¹</a> Rollovers, as well as contributions, may be made to Roth IRAs by individuals at any age.<br /> <br /> It appears that the same rationale also permits rollovers to qualified plans and Section 403(b) tax sheltered annuities after age 73 if minimum distribution requirements are met ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3892">3892</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3908">3908</a>, Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4075">4075</a> to Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4084">4084</a>).<br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; Rev. Rul. 82-153, 1982-2 CB 86; Let. Rul. 9534027<em>. But see</em> Let. Rul. 8450068.<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> Yes.<br /> <br /> The Pension Benefit Guaranty Corporation (PBGC) has issued rules that are designed to encourage taxpayers to roll amounts from defined contribution plans into defined benefit plans by clarifying the protection that these funds would receive should the defined benefit plan be terminated and become subject to PBGC control.<br /> <br /> Typically, the PBGC guarantees the payment of non-forfeitable pension benefits up to a statutory maximum that is adjusted each year. Further, if the plan’s benefit increase has been effective for fewer than five years, the percentage of the benefit that is guaranteed is phased-in over a five-year period, becoming fully guaranteed only after five years.<br /> <br /> Under the PBGC rules, amounts rolled from a defined contribution plan into a defined benefit plan will not be subject to the maximum guaranteed benefit limitations or the otherwise applicable five-year phase-in limitations. This will provide taxpayers with greater assurance that their defined contribution plan funds will be protected if they are rolled over into a defined benefit plan.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  29 CFR Pts. 4001, 4022, 4044; 79 FR 70090.<br /> <br /> </div>

<div class="Section1"><br /> <br /> An individual may receive a distribution from his or her traditional IRA and within 60 days roll it over into an eligible Section 457 governmental plan to the extent that the distribution would be includable in income if not rolled over.<a href="#_ftn1" name="_ftnref1">¹</a> The Section 457 plan must agree to separately account for the funds.<a href="#_ftn2" name="_ftnref2">²</a> After-tax contributions including nondeductible contributions to a traditional IRA may not be rolled over from a traditional IRA into an eligible Section 457 governmental plan.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> The IRS may waive the 60-day rollover requirement if failure to waive it would be against equity or good conscience, including upon the occurrence of a casualty, disaster, or other event beyond the reasonable control of the individual subject to the requirement ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4016">4016</a>).<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&sect; 408(d)(3)(A), 402(c)(8)(B)(v).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect; 402(c)(10).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRC &sect;&sect; 402(c)(2), 457(e)(16).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; IRC &sect; 402(c)(3); Rev. Proc. 2003-16, 2003-1 CB 359.<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> A required minimum distribution from an IRA is not eligible for rollover. If a minimum distribution is required for a calendar year, any amounts distributed during a calendar year from an IRA are first treated as the required minimum distribution for the year.<br /> <br /> <hr /><br /> <br /> <strong>Planning Point:</strong> The portion of a distribution that is a required minimum distribution from an IRA, and so not eligible for rollover, is determined in the same manner as provided for distributions from qualified plans. For example, if a minimum distribution is required under IRC Section 401(a)(9) for a calendar year, an amount distributed during a calendar year from an IRA is treated as a required minimum distribution to the extent that the total required minimum distribution for the year under Section 401(a)(9) for that IRA has not been satisfied.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> <hr /><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  Treas. Reg. § 1.408-8, A-4.<br /> <br /> </div>

<div class="Section1"><br /> <br /> Yes.<br /> <br /> Beginning for distributions in 2008, a non-spouse designated beneficiary of a qualified plan, a tax sheltered annuity, or an eligible Section 457 governmental plan may make a direct rollover into an inherited IRA, including a Roth IRA ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3662">3662</a>).<a href="#_ftn1" name="_ftnref1">¹</a> The rollover must be made by means of a trustee-to-trustee transfer. The transfer will be treated as an eligible rollover distribution.<a href="#_ftn2" name="_ftnref2">²</a> Distributions to non-spouse beneficiaries prior to 2008 were not eligible rollover distributions.<br /> <br /> An inherited IRA created under this provision must remain in the name of the owner of the original retirement account payable to the designated beneficiary. The IRA is subject to required minimum distributions as for any IRA payable to a designated beneficiary ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="3687">3687</a>).<br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; Notice 2008-30, 2008-1 CB 638, A-7.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect; 402(c)(11).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> No.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> Where a plan participant received a distribution from a qualified retirement plan and, within 60 days, the funds were placed in a traditional IRA held in the participant&rsquo;s wife&rsquo;s name only, but not pursuant to a valid QDRO ( Q <a href="javascript:void(0)" class="accordion-cross-reference" id="4005">4005</a>), the Tax Court found that a valid rollover had not occurred.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; News Release IR-1809, Q17, 5-9-77; IRC &sect; 408(d)(3)(A).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; Rodoni v. Comm., 105 TC 29 (1995).<br /> <br /> </div></div><br />