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Until January 1, 2015 it was permitted to have multiple rollovers from a QDRO to an Individual Retirement Account as a result of a divorce settlement.

This multiple rollover rule has been rendered obsolete by of a decision of the Tax Court (T.C. Memo. 2014-21, Bobrow v. Commissioner of Internal Revenue, January 28, 2014). This decision was expanded by the Internal Revenue Service in Announcement 2014-15 which provided in relevant part:

Section 408(d)(3)(A)(i) provides generally that any amount distributed from an IRA will not be included in the gross income of the distributee to the extent the amount is paid into an IRA for the benefit of the distributee no later than 60 days after the distributee receives the distribution. Section 408(d)(3)(B) provides that an individual is permitted to make only one rollover described in the preceding sentence in any 1-year period. Proposed Regulation § 1.408-4(b)(4)(ii) and IRS Publication 590, Individual Retirement Arrangements (IRAs), provide that this limitation is applied on an IRA by IRA basis. However, a recent Tax Court opinion, Bobrow v. Commissioner, T.C. Memo. 2014-21, held that the limitation applies on an aggregate basis, meaning that an individual could not make an IRA-to-IRA rollover if he or she had made such a rollover involving any of the individual's IRAs in the preceding 1-year period (emphasis mine). The IRS anticipates that it will follow the interpretation of §408(d)(3)(B) in Bobrow and, accordingly, intends to withdraw the proposed regulation and revise Publication 590 to the extent needed to follow that interpretation (emphasis mine).These actions by the IRS will not affect the ability of an IRA owner to transfer funds from one IRA trustee directly to another, because such a transfer is not a rollover and, therefore, is not subject to the one-rollover-per-year limitation of § 408(d)(3)(B).

Significance In Divorce.

IRA Rollovers incident to divorce are still permitted. However, prior to inserting in the Marital Settlement Agreement provision for a Rollover from a Qualified Plan to Individual Retirement Account is to be effected, the parties must understand that this will be the only permitted rollover in the 365 day period. [1]


The one-year limitation period begins on the date on which a taxpayer withdraws funds from an IRA or individual retirement annuity and has no relation to the calendar year. Thus, for example, a taxpayer may not make a nontaxable rollover on December 31 in one calendar year and make another nontaxable rollover on January 1 in the next calendar year.

Failure to comply with this new Internal Revenue Service position can result in the "rollover" being treated as a Taxable Event with tax and penalties (10% premature distribution, §6662 Accuracy Related Penalty [20%]) attributed to the distributor.

Based on the impact of the Tax Court Memorandum and the IRS Guidance, it is suggested that attorneys providing for a Rollover in the Marital Settlement Agreement also include in their file a letter to the client reviewing the new 365 Day Rollover Rule of the Internal Revenue Service.

[1] Not relevant to this artice are permitted "Trustee" to "Trustee" rollovers related to investment decisions (unrelated to divorce).