If you take a distribution from your traditional IRA, you can roll over the amount to the same traditional IRA or another traditional IRA, provided the following requirements are met:
- The rollover is completed within 60 days of receiving the distribution.
- You have not completed an IRA-to-IRA rollover for the IRAs within the 12-months that preceded the date the distribution occurred.
- The amount is rollover eligible. For IRA-to-IRA rollovers, ineligible rollover amounts include amounts representing required minimum distributions .
You are allowed to make tax-free rollovers from your IRAs at any age, but if you are 70½ or older, you cannot roll over your RMD; this would be considered an excess contribution.
If you are required to take RMDs each year, be sure to remove the current year's RMD amount from your IRA before implementing the rollover.
Exceptions to the 60-deadline apply only in certain cases, as described below.
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You have 60 days to return the funds or you will be taxed. If you are under 59½ you will also pay a 10% penalty unless you qualify for an early withdrawal under these scenarios:
- After IRA owner reaches 59½
- Total and permanent disability
- Qualified higher education expenses
- First time home buyers up to $10,000
- Amount of unreimbursed medical expenses
- Health insurance premiums paid while unemployed
- Certain distributions to qualified military reservists called to duty
- In-plan Roth IRA rollovers or eligible distributions contributed to another retirement plan within 60 days
There's one other option: A little known section of the IRS tax code allows substantially equal periodic payments annually before 59½ . It stipulates that you take money out of your IRA for five years or until age 59½, whichever is longer.