Time Limits

• A rollover contribution refers to an individual contributing money to a second retirement plan that was taken out of an existing qualified retirement plan or IRA. A rollover is typically a tax-free transaction as long as the contribution to the second IRA is made by the 60th day after receiving the distribution. In addition, the distribution must not have been a required distribution. Rollovers to a traditional IRA may come from another traditional IRA, a qualified retirement plan through employment, a tax-sheltered annuity section 403 plan or a deferred compensation section 457 plan.
  
  

Rules

• The retirement plan making a distribution to you, other than an IRA, must give you a written explanation of rollover treatment. If you fail to rollover your distribution by the 60th day after receiving it, the distribution must be treated as a taxable distribution on your taxes. When you receive a qualified tax-free distribution to rollover, you can't make another tax-free rollover from the same IRA, or to the new IRA, for one year from the date you received the distribution. The rollover into the new IRA cannot exceed the amount of the distribution. However, you can make a partial rollover and keep the balance. The amount not rolled over would be taxable and may be subject to a 10-percent penalty.
  
  

Exceptions

• There are automatic waivers to the 60-day rule for a tax-free rollover. If an individual does not qualify for one of the automatic waivers, an individual may request a special waiver from the IRS. Possible circumstances that may behoove the IRS to grant a special waiver include errors made by the financial institution, a death, hospitalization, incarceration, disability or a lost check. If you find yourself in this position, visit the IRS website (see Resources) or check with your financial adviser. Exceptions also may apply to the one-rollover-per-year rule from an IRA if the IRA was at a financial institution that failed, and neither the depositor nor the custodial institution initiated the new rollover, and the custodial institution is insolvent.