Chapter 4 - Rollovers & Transfers from IRAs Exception for Involuntary Distributions from Failed Financial Institutions In a 1991 letter from James J. McGovern, Assistant Chief Counsel of the IRS, to Alvin E. Kitchen, Associate Director, FDIC, the IRS indicated that it would not prevent the rollover of an involuntary distribution due to the insolvency or bankruptcy of a financial organization when the IRA owner had already rolled over a distribution within the previous one-year period. [IRS Special Ruling, February 5, 1991] The letter indicated that the onerollover-per-year rule was designed to restrict the legitimate movement of funds between IRAs where the owner has direct control of the funds. Per the 1991 letter, the exception applies to a distribution that meets all three of the following requirements: * It is made from a failed financial institution by the Federal Deposit Insurance Corporation (FDIC) as receiver for the institution. IRA Digital Reference Manual © PMC