60-Day IRA Rollovers – How to Count the 60 Days

Monday, April 30, 2012

By Beverly DeVeny, IRA Technical Expert

Follow Me on Twitter: @BevIRAEdSlott

An IRA rollover is when you take money out of your IRA or Roth IRA and the distribution is payable to you. You can put the funds in your bank account, spend them, invest them, do anything you want with them. Then, within 60 days, you can put all or part of the amount distributed back into your IRA or Roth IRA. There will be no tax or penalty on this transaction.

But how do you know when the 60 days are up? You do NOT start counting from the date you request the distribution, the date on the check, or the date the funds left the IRA account. You start counting on the date you receive the funds if they are mailed, or the date they hit your bank account if they are transferred.

NOTE: It is 60 days, not 90 days as many taxpayers seem to believe based on PLR requests to IRS for an extension of time to complete a rollover.

It is never a good idea to wait until the last day to complete your rollover. You might find that the bank closed early for a holiday or that your 60th day falls on a weekend. The financial institution could make a mistake and put your funds in a non-IRA account. Any number of things could go wrong so you want to complete your rollover as soon as possible – not on the very last day.

In fact, don’t do a rollover at all. Do a direct transfer from one IRA custodian to another. Then you don’t have any of the problems or issues discussed above. You worked hard for that money – don’t lose it because of a stupid mistake.
 

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