Can You Roll Over IRA Funds More Than Once?

You must abide by federal tax rules when you move your IRA.

You must abide by federal tax rules when you move your IRA.

You can start to save money for your retirement years by setting up an individual retirement account. You control your own IRA, which means that you do not have to worry about your employer or anyone else telling you where and how you can invest your money. If you do not like the way your investment is panning out, you can move it somewhere else and you can move the same funds more than once. However, federal tax rules do limit your ability to make certain kinds of transfers.


You can start an IRA at a bank, a brokerage firm or an insurance company. The entity that handles the account acts as your trustee, and under federal laws you can replace your trustee at any time by moving your funds elsewhere. If you want to keep the transaction simple, you should arrange a trustee-to-trustee transfer. This entails your current custodian directly transferring funds or securities to the new custodian. You can conduct trustee-to-trustee transfers for any amount and as often as you like.


If you want to handle the transfer of funds yourself, you can conduct an IRA rollover. This means that you liquidate your current IRA and then take possession of the funds with the intention of opening a new account elsewhere. Under federal law, you can roll over a particular IRA in this manner only once within a 12-month period. However, if you have multiple IRAs at different institutions, you can do several rollovers within a single 12-month period as long as each pool of money moves just once. You can also arrange a trustee-to-trustee transfer with money you have rolled over within the past 12 months.


No rules exist specifying how long direct IRA transfers should take and it can take anywhere from a few days to a few months for your custodians to complete the transaction. Rules are much stricter for rollovers. Since you have access to your otherwise tax-sheltered funds, the Internal Revenue Service wants to ensure that you redeposit the money into another retirement account. You have precisely 60 days to complete the deed otherwise the IRS reclassifies the rollover as a withdrawal. If this happens you forfeit the tax-deferred status of your money and have to pay income tax on the whole amount as well as a 10 percent federal tax penalty.


Many people buy mutual funds, stocks or bonds with IRA money, and in many instances you have to pay a fee when you purchase these types of securities. The more you move your funds, the more you may end up paying in fees. Likewise, you may have to pay a premature withdrawal penalty if you cash in a certificate of deposit before the term ends. A rollover may seem attractive when a broker flashes a report on a high-performing mutual fund in front of your eyes, but always consider the costs as well as the benefits before making the switch.

About the Author

Ciaran John began writing in 1994 with contributions to "The Hourly Press" and "The Sawbridgeworth Observer," and has since written for many online and print publications. He has 12 years experience working for financial services companies as a business banker, lender and investment representative and spent four years working in human resources.

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