IRA Rollovers and Restrictions

The topic of IRA rollovers is something that many people rarely consider. However, when the time comes where you need to rollover your retirement account, you will need to be aware of some rules. Here are a few rules and restrictions that you will want to know about before rolling over your IRA.

60-Day Rule

The 60-day rule governs the amount of time that you have to complete a rollover before you are penalized. If you take a disbursement from your original IRA provider and then do not deposit it into another IRA within 60 days, the IRS will treat it as an early withdrawal. You will then have to pay a 10% penalty and taxes on the money.

1-Year Rule

The 1-year rule is another rule that you will want to be aware of. This rule states that you can only rollover funds from an IRA once in within a 1-year period. For example, let's say that you have an IRA that you have contributed to for years. You decide that you want to open a new IRA and fund it with funds from the original IRA. You then transfer part of the funds to the new IRA. You would then not be able to rollover funds from the first account again for another year to any other IRA.

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