[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Proposed Rules]
[Pages 40031-40032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16281]



Internal Revenue Service

26 CFR Part 1

RIN 1545-BL98

Individual Retirement Plans and Simplified Employee Pensions; 
Partial Withdrawal

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Partial withdrawal of notice of proposed rulemaking.


SUMMARY: This document withdraws part of a notice of proposed 
rulemaking that specifically relates to rollovers from individual 
retirement arrangements (IRAs). The partial withdrawal of the proposed 
regulation will affect individuals who maintain IRAs and financial 
institutions that are trustees, custodians, or issuers of IRAs.

DATES: As of July 11, 2014, the proposed amendment to Sec.  1.408-
4(b)(4)(ii), published Tuesday, July 14, 1981 (46 FR 36198), is 

FOR FURTHER INFORMATION CONTACT: Vernon S. Carter at (202) 317-6700 
(not a toll-free number).



    Section 408(d) governs distributions from IRAs. Generally, section 
408(d)(1) provides that any amount distributed from an IRA is 
includible in gross income by the payee or distributee. Section 
408(d)(3)(A)(i) allows a payee or distributee of an IRA distribution to 
exclude from gross income any amount paid or distributed from an IRA 
that is subsequently paid into an IRA not later than the 60th day after 
the day on which the payee or distributee receives the distribution. 
Section 408(d)(3)(A)(i) and (d)(3)(D)(i). Section 408(d)(3)(B) provides 
that an individual is permitted to make only one nontaxable rollover 
described in section 408(d)(3)(A)(i) in any 1-year period.
    On July 14, 1981, the Federal Register published proposed 
regulations (46 FR

[[Page 40032]]

36198) that would have amended Sec.  1.408-4 of the Income Tax 
Regulations by adding a new paragraph (b)(4)(ii). Those proposed 
regulations provide that the rollover limitation of section 
408(d)(3)(B) is applied on an IRA-by-IRA basis. This rule is reflected 
in IRS Publication 590, Individual Retirement Arrangements (IRAs). 
However, section 408(d)(3)(B) provides that the exclusion from gross 
income for IRA rollovers pursuant to subparagraph (A)(i) does not apply 
``if at any time during the 1-year period ending on the day of such 
receipt such individual received any other amount described in that 
subparagraph from an individual retirement account or an individual 
retirement annuity which was not includible in his gross income because 
of the application of this paragraph.''
    Based on the language in section 408(d)(3)(B), a recent Tax Court 
opinion, Bobrow v. Commissioner, T.C. Memo. 2014-21, held that the 
limitation applies on an aggregate basis. Thus, under Bobrow, an 
individual cannot make an IRA-to-IRA rollover if the individual has 
made an IRA-to-IRA rollover involving any of the individual's IRAs in 
the preceding 1-year period. The IRS intends to follow the opinion in 
Bobrow and, accordingly, is withdrawing paragraph (b)(4)(ii) of Sec.  
1.408-4 of the proposed regulations and will revise Publication 590. 
This interpretation of the rollover rules under section 408(d)(1)(B) 
does not affect the ability of an IRA owner to transfer funds from one 
IRA trustee or custodian directly to another, because such a transfer 
is not a rollover and, therefore, is not subject to the one-rollover-
per-year limitation of section 408(d)(3)(B). See Rev. Rul. 78-406, 
1978-2 C.B. 157.
    In response to comments expressing concern over implementation of 
the rollover limitation as interpreted in Bobrow, the IRS released 
Announcement 2014-15, 2014-16 I.R.B. 973, on March 20, 2014. 
Announcement 2014-15 addresses the application to Individual Retirement 
Accounts and Individual Retirement Annuities of the one-rollover-per-
year limitation of section 408(d)(3)(B) and provides transition relief 
for owners. Consistent with that Announcement, the IRS will not apply 
the Bobrow interpretation of section 408(d)(3)(B) to any rollover that 
involves a distribution occurring before January 1, 2015.

List of Subjects in 26 CFR Part 1

    Treatment of distributions from individual retirement arrangements.

Partial Withdrawal of Proposed Rulemaking

    For the reasons stated in the preamble and under the authority of 
26 U.S.C. 7805, the Internal Revenue Service withdraws the proposed 
amendment to Sec.  1.408-4(b)(4)(ii).

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2014-16281 Filed 7-10-14; 8:45 am]