Industry story
Roth Conversions Are Not Subject to the Once-Per-365-Days Rollover Limit
regulatory-compliance retirement-income tax-planning
Fidelity's representative was wrong, and that error could have cost a listener a meaningful chunk of his retirement account. The once-per-365-days rollover limit applies only to same-type IRA rollovers; the IRS explicitly excludes Roth conversions from that cap, because it wants the tax revenue and has no incentive to throttle them. In this case, the listener converted $100,000 from a traditional IRA, had $25,000 withheld for taxes, and wanted to replace that withholding from a brokerage account within 60 days to complete the full conversion. As Jim Saulnier and Chris Stein explain, that move is a conversion, not an IRA-to-IRA rollover, so the one-per-year limit never applied. The 60-day deadline is real, though, and the custodian is not responsible for telling you whether you're eligible. That's on you.
Analysis
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A Fidelity rep told a listener he was blocked from completing his Roth conversion because the once-per-365-days rollover limit had already been used. Jim Saulnier and Chris Stein, reviewing the IRS rules, said the rep was wrong on the core point.
The once-per-year limit applies to IRA-to-IRA or Roth-IRA-to-Roth-IRA same-type rollovers only. Conversions from a traditional IRA to a Roth are explicitly excluded. You can do as many Roth conversions as you want in a calendar year. The IRS wants the tax revenue and has no incentive to cap them.
The listener's situation: a $100,000 conversion where the custodian withheld $25,000 for taxes. He wanted to move $25,000 from a taxable brokerage account back into the Roth within 60 days to make the full $100,000 land in the Roth. That move is a conversion, not an IRA-to-IRA rollover, so the one-per-year rule was never in play.
One thing the rep got right, even if accidentally: the 60-day deadline is real. Miss it and the money doesn't complete the conversion. And custodians are not responsible for telling you whether you're eligible to do a rollover. That's on you.
A listener reported that a Fidelity representative told him he could only do one 60-day rollover every 365 days, blocking his attempt to replace withholding taxes from a Roth conversion by moving funds back into his Roth from a brokerage account. Jim Saulnier and Chris Stein reviewed the IRS rules and concluded the Fidelity rep was wrong on two counts. The once-per-365-days limit applies only to IRA-to-IRA or Roth-IRA-to-Roth-IRA same-type rollovers. A conversion from a traditional IRA to a Roth IRA is explicitly excluded from that limit — you can do as many Roth conversions as you want in a given year. Because the IRS wants the tax revenue, it has no interest in capping conversions.
The listener's specific situation involved a $100,000 conversion where $25,000 was withheld for taxes; he wanted to roll $25,000 from a taxable brokerage account back into the Roth within 60 days to complete the full conversion. Moving money from a traditional IRA (or taxable account treated as replacing an IRA distribution) into a Roth is a conversion — not an IRA-to-IRA rollover — so the one-per-year limit would not have applied. Importantly, the 60-day deadline is real and must be met. The hosts also noted that custodians are not legally responsible for determining whether a client is eligible to do a rollover; that responsibility lies with the account holder.
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