IRA rollovers, not transfers

A Sept. 20 letter by Daniel Peterson indicated a new tax rule limited IRA rollovers to one per year and blamed Congress for over-loving the wealthy. Almost everything in the article was incorrect and things are not nearly as bad as Peterson thinks they are, at least with respect to his IRA.

In 1981, Congress imposed the one IRA rollover per year rule and a 2014 court case changed the interpretation the IRS has been making for the last 34 years. The rule change simply restricted the rollover of IRAs and not the transfer of IRAs. A rollover means taking money out of an IRA, for up to 60 days, and then putting it back in. A transfer means moving an IRA from one custodial institution to another.

There has been and continues to be no limitation on the number or frequency of transfers of IRAs. IRAs need not be left in what one considers an inappropriate investment, and an individual can change his or her investment of those funds whenever they so choose. Anyone in Peterson’s situation is not restricted from making a change in the IRA’s underlying investment at any time.

Mark Powers

Spokane

( Editor’s note: The original letter was in error. Mr. Powers’ letter is correct.)