IRA Rollover/Transfers and Once-Per-Year IRS Rule

[tah0476]

Hello, this question is going to be about doing IRA rollovers and transfers, the once per year rule, and purchasing an annuity.

My financial advisor had me do two things into order to prepare for purchasing an annuity.

1)  I transferred money from one qualified rollover IRA account to another.  The reason this was done was to simply get all the funds for annuity number 1 into a single IRA account.  This was done between two Fidelity rollover IRAs that I have and it seemed to be a direct transfer that was settled in 2 days.

2)  My wife did a rollover of her company 401K plan to a Charles Swaab IRA in preparation to purchase annuity #2 from qualified funds.  She never received a check, and the funds/check seemed to do directly to Charles Swaab.

My simply question(s) is this:

1)  Are these both non-taxable events?  It seems to me they are because the from and to accounts are both qualified?

2)  Does any of the two scenario above count toward the once per year rule?

I am primarily asking this because I believe the annuities will be purchased by rolling over/transferring against to the insurance company "Annuity IRA" as qualified funds.

[dmertz]

Both are non-taxable transactions.  What you describe for the movement of funds between Fidelity accounts would not be a distribution or rollover and is not reportable.  Since it's not a rollover, it has no bearing on the one-rollover-per-12-months limitation.  The movement of funds from the 401(k) to an IRA is a distribution and rollover, but rollovers from a 401(k) are disregarded with respect to the one-rollover-per-12-months limitation.

Any movement of the resulting IRAs to IRA annuities should similarly be done by trustee-to-trustee transfer to avoid any involvement of the one-rollover-per-12-months limitation because such transfers of IRAs are nonreportable.

[Opus 17]

As long as everything is done directly between the banks, it is non-taxable and does not trigger the once-per-year rule.  If you take a withdrawal into your own bank account and use that to purchase the annuity, that will trigger the once-per-year rule (but it is still once per year per person, so you and your spouse could each do that one time.). But you should try to keep it electronic between the two plans.