The 60-Day Rollover Rule: What You Need to Know
How indirect rollovers work, what happens if you miss the deadline, and why direct rollovers are safer
With an indirect rollover, your plan withholds 20% for taxes and you have 60 calendar days to deposit the full original amount into a new retirement account. Miss the deadline and the entire distribution becomes taxable income, plus a 10% penalty if you are under 59 1/2.
Direct vs Indirect Rollovers
- Direct rollover: No withholding, no deadline, no risk
- Indirect rollover: 20% withheld, 60-day deadline, must replace out-of-pocket
- One per year: IRA-to-IRA indirect rollovers limited to once per 12 months
- Best practice: Always choose direct rollover when possible