FAQs for IRA Rollover Rules

Understanding IRA rollover rules can prevent you from incurring penalties and losing your hard-earned retirement dollars. Here are a few frequently asked questions about IRA rollover rules.

What Happens if I Cash out the Account?

If you decide to take the funds from your retirement account in cash, you will be forced to pay a 10 percent early distribution penalty. In addition to that, you will have to pay income taxes on the amount that you take in cash.

How Long Do I Have to Complete This Process?

If you are rolling your funds over into a new IRA, you will have to complete the transaction within 60 days. If you do not transfer the funds to your new IRA within 60 days, the funds will be treated as if they were an early distribution. You will then have to pay the 10 percent early distribution penalty and pay taxes on the money.

What Is the One-Year Rule?

The one-year rule applies to making multiple rollovers out of the same IRA. You have to wait one year before making a second rollover out the same IRA into another IRA. For example, if you roll over half of the funds from your IRA, you will have to wait at least a year to roll over the rest of the funds.