In 2014, a tax attorney learned the hard way that even the IRS can issue guidance that conflicts with the law. In Bobrow v. Commissioner (T.C. Memo. 2014-21), the US Tax Court ruled that only one IRA-to-IRA rollover is permitted in any 12-month period per taxpayer, and not per IRA. When the taxpayer later asked the court to reconsider, arguing that he had relied on IRS Publication 590, Judge Joseph W. Nega rejected that claim, stating that taxpayers who rely on IRS publications do so “at their own peril.”

The question for you is this: Is your source for IRA guidance reliable?

The Bobrow Case: When Even Tax Attorneys Get It Wrong

In Bobrow v. Commissioner, Alvan Bobrow, a tax attorney and partner at a major law firm, took two IRA distributions in the same year and rolled both over within 60 days.

At the time, IRS Publication 590 stated that an individual could make multiple IRA-to-IRA rollovers in a 12-month period, as long as the same IRA was not involved in more than one rollover. Had that guidance been correct, both of Bobrow’s rollovers would have been valid and nontaxable.

When the IRS audited his return and discovered that he had completed two IRA rollovers, they disallowed one, causing it to be taxable, asserting that the tax code permits only one rollover per taxpayer per 12-month period. The Tax Court agreed, ruling that the Internal Revenue Code (the tax code) allows just one rollover across all IRAs.

On appeal, Bobrow argued that he had followed Publication 590, but the court held that IRS publications are not binding law and that taxpayers “rely on IRS guidance at their own peril.” The decision prompted the IRS to update its interpretation and revise Publication 590 so the rule reflects one rollover per year, per individual.

Your IRA Advisors Might Be Able to Help

IRA rules are complex and often require guidance from more than one professional.

Your financial advisor helps manage your investments, but the rules governing contributions, rollovers, and distributions require different expertise. That is why it is important to ensure that your advisor is “IRA smart.” An IRA-smart advisor understands the tax and procedural requirements that apply to IRAs, not only investment strategy.

When seeking IRA help, ask your advisor:

How do you stay current on IRS regulations and rulings?Have you handled IRA corrections or reporting errors?Do you coordinate with tax or legal professionals when needed?

Depending on your needs, your advisor may work with a tax specialist or estate-planning attorney. For example, your financial advisor can help ensure that your rollover is made to the right type of account, your tax professional can determine whether your rollover should be a Roth conversion, and your estate-planning attorney can decide whether a trust should be the beneficiary of your IRA.

Working with professionals who understand IRA rules helps ensure that your transactions remain compliant and tax-efficient.

Made a Mistake? The IRS Might Be More Lenient if You Relied on the Right Professional

The IRS sometimes grants relief when an error is clearly caused by a financial institution, particularly with employer plans.

In Private Letter Ruling 202147015 (Sept. 1, 2021), a taxpayer requested a direct rollover of designated Roth contributions from their employer’s 401(k) plan to their Roth IRA. The plan’s third-party administrator sent two checks to the receiving institution, one for the Roth balance and one for the pretax balance.

The receiving financial institution mistakenly deposited both checks into a traditional IRA instead of placing the Roth amount into a Roth IRA. When the taxpayer discovered the error, he requested IRS relief. The IRS granted a waiver, concluding that the failure resulted from a financial institution error beyond the taxpayer’s control. The taxpayer was given 60 days to correct the error.

This outcome contrasts with PLR 202033008.

IRS Says: You Cannot Claim Advisor Error When You Are the Administrator

In PLR 202033008 (May 18, 2020), a taxpayer withdrew IRA funds to make a cash offer on a home after being told by a real estate agent and financial institution that he could repay the funds later. He missed the 60-day rollover deadline and requested an IRS waiver, claiming that his failure was due to their bad advice.

The IRS denied the request, explaining that neither the realtor’s comments nor the custodian’s omission constituted a financial institution error. The taxpayer had effectively used his IRA as a short-term personal loan, which is not what Congress intended for rollovers.

A Favorable PLR Might Come Down to Who Administers the Account

Employer plans such as 401(k)s have administrators who handle processing and reporting. When they, or a plan administrator, or custodian make a documented mistake, the IRS may grant relief because participants are not expected to oversee plan operations.

IRAs are individually managed. The IRS treats the IRA owner as the plan administrator, meaning the responsibility and liability for compliance rest with the IRA owner unless a proven custodian error caused the issue.

If you are moving funds from an employer plan to an IRA and a financial institution makes an error, the IRS may allow a correction.

If you handle your own IRA transactions, you must ensure that every step complies with the rules, because you might have to absorb the consequences of any errors.

Be Careful When Relying on Articles, Even From Industry Experts

Many investors turn to written and online resources for quick answers. Articles and webinars can be helpful learning tools, but even experienced authors sometimes include statements that do not align with current IRS interpretations or that oversimplify complex rules.

That is not a criticism of the writers; it reflects how quickly IRA rules change. A rule that was accurate last year may no longer apply after new legislation or Treasury guidance.

I have seen published materials, even in respected outlets, that misstated rollover rules or beneficiary options based on outdated information. These examples show why every explanation, no matter how well written, must be verified against official IRS sources.

When reading any article, confirm that it references the latest IRS guidance and effective dates, and clarifies whether examples apply under prior or current law.

Treat articles as a starting point for learning, not a substitute for personalized advice.

Can You Rely on Artificial Intelligence for IRA Guidance?

Artificial intelligence tools such as ChatGPT can summarize complex tax rules quickly and accurately in many cases. However, they usually include a disclaimer regarding accuracy. For example, ChatGPT warns:

“ChatGPT can make mistakes. Check important info.”

That warning is justified. AI systems depend on the accuracy and freshness of the data they use. When new laws or official guidance are released, AI tools may take time to reflect those changes.

Sometimes, AI describes a rule correctly but applies it to the wrong situation, such as confusing post-death required minimum distribution rules for designated and nondesignated beneficiaries.

AI can be a valuable tool for research and clarification, but it should never replace qualified professional judgment. Use it to formulate better questions, then confirm the answers with authoritative sources or a professional who specializes in IRA rules.

The Bottom Line: How to Get Reliable IRA Guidance

IRA rules are complex, and solutions often depend on facts unique to each case.

The most reliable hierarchy of information begins with the Internal Revenue Code and Treasury Regulations, followed by official IRS rulings, notices, and announcements. A Private Letter Ruling can also be useful, but it applies only to the taxpayer to whom it is issued.

While articles, AI tools, and online summaries can help you understand the basics, they are no substitute for professional expertise.

Before initiating an IRA-related transaction, consult with a qualified advisor. An advisor who specializes in retirement accounts will either know the correct answer or know where to find it.

Getting help from the right advisor can make the difference between a compliant, tax-efficient IRA transaction and an expensive, irreversible mistake.

Denise Appleby is a freelance writer. The opinions expressed here are the author’s. Morningstar values diversity of thought and publishes a broad range of viewpoints.