South Carolina Life and Health Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

When you decide to roll over a Traditional IRA, the Internal Revenue Service (IRS) allows you a specific timeframe during which you can transfer funds from one retirement account to another without incurring tax penalties. This timeframe is 60 days. If the rollover is completed within 60 days, the transaction is considered tax-free, meaning you won't have to pay taxes on the amount transferred, and it won't count as a distribution, preserving your retirement savings.

Exceeding this 60-day period can lead to significant tax consequences. If the funds are not rolled over in time, the amount is treated as a distribution, making it subject to income tax and possibly early withdrawal penalties if you are under the age of 59½. Understanding this timeframe is crucial for anyone managing their retirement accounts, as proper adherence to the 60-day rule ensures that you maximize your savings potential while minimizing tax liabilities.