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April 2024
What You Need To Know About IRA Rollovers
Are you thinking of an IRA rollover? Getting these three rules right is critical if you want to avoid a big tax bill.
THE 60-DAY RULE
Your rollover must be completed within 60 days of withdrawal, or it’ll be taxable. You’ll also get hit with a 10% early distribution penalty if you’re under the age of 59 1/2. If you miss the 60-day limit, you may qualify for a rule waiver. The late rollover must be due to one of the IRS specified reasons and completed within 30 days after the specific reason for failing to meet the 60-day requirement.THE ONE-ROLLOVER-EVERY-12-MONTHS RULE
This rule applies in aggregate to IRAs and Roth IRAs. If you have both types of IRAs, you are still limited to just one 60-day rollover in a IRS-month period. Additional rollovers can result in federal income tax and possible early withdrawal penalties. Some specific exceptions apply.THE SAME-PROPERTY RULE
If you received a cash distribution, cash must be deposited in the rollover IRA. Similarly, if you took your distribution in stocks, you must deposit the same stock shares in the rollover IRA.Talk to your tax professional.
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