By Lisa J., IRA Account Supervisor and Guest Blogger
I remember being in grade school learning about classroom rules, recess rules and even rules for the school bus. Some kids in my class chose to pay attention to the rules and others didn’t. But with your money and retirement savings on the line, don’t you want to know the rules?
The 60-Day IRA Rule
Let’s say you have decided to rollover all or a portion of your IRA from another financial institution to Scottrade. When you are moving your funds from an IRA at one financial institution to another IRA at a different financial institution you will want to rollover all the funds within 60 days. Why? It is because of the 60-day IRA rule, which simply means that if you do not place all the money dispersed from your original IRA into the new IRA account within 60 days, there will be possible taxes and IRA penalties.
Rolling over an IRA, again?
The Internal Revenue Service (IRS) has defined guidelines on how many IRA rollovers you can make. I have come across a couple of instances where a client has rolled over an IRA to a Scottrade IRA, took a distribution six months later, and then tried to complete another rollover with the money that was disbursed. The reason why this cannot be completed is because of the one-year waiting rule, which basically means once you rolled over your account or a portion of the funds, you cannot roll the portion or account over again within 12 months.
What can and cannot be rolled over?
Both cash and security disbursements can be rolled over as long as they do not go against an IRA rollover rule. Required minimum distributions (RMD), however, are not eligible for an IRA rollover because according to the IRS it is an excess contribution.
Of course, these are just a few of the rules, but you can read more about IRA account types and IRA rollovers by visiting the Scottrade® Knowledge Center. There you can read about the rules for making IRA withdrawals and even recharacterization.
What else have you learned about IRA rollover rules?
Lisa J., started in the Scottrade IRA department in October 2004. She handles IRA rollovers, distributions and answering client IRA questions.
The information presented in this blog is for education purposes only and should not be considered an endorsement of a particular product(s), investment(s) or account(s). This information is intended only to assist you in making financial decisions, is broad in scope and does not consider your personal financial situation. It’s important to keep in mind that as with any important financial decision, seek competent tax advice during the decision-making process.