This is the Rule: One-Year Waiting Rule Within one year, after you distribute assets from your IRA and rollover any part of that amount, you cannot make another rollover from the same IRA to another (or the same) IRA. A violation of this rule can make this rollover taxable!
This is the rule as I understand it: For example, imagine that you have two IRAs - IRA-1 and IRA-2 - and you make a tax-free rollover from IRA-1 into a new IRA (IRA-3).
Within one year of the distribution from IRA-1, you cannot make another tax-free rollover from IRA-1 or from IRA-3 into another IRA. However, you could roll funds out of IRA-2 into any other IRA, because you did not roll money into or out of that account within the previous year.
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My question: Suppose in the above example, IRA-3 is a 3 month cd. Is this going to be a problem? When IRA-3 matures after 3 months is the owner limited to keeping the money in the same institution. In other words, is the ira owner hostage to that institution for another 9 months? For that matter even if the owner rolls over the funds with the same institution is this a violation of the 1 year rollover rule?