What Is the 60-Day Rollover Rule for Retirement Plans?

Quick Answer

If you’re moving money from a retirement plan or IRA to another, you have 60 days to complete the rollover and avoid taxes and penalties. Missing the deadline could mean losing your tax-deferred status and future earnings on your investment.

Cropped shot of a young man working on his laptop at his desk in his office.

If you're considering moving money between retirement accounts to access better investment options, consolidate accounts or keep control of your retirement funds when you change jobs, it's important to know the 60-day rollover rule. The 60-day rollover rule allows account holders to withdraw funds from a 401(k), individual retirement account (IRA) or other qualified retirement plan, then redeposit them within 60 days without facing taxes or penalties.

How Does the 60-Day Retirement Rollover Period Work?

If you get a new job, get divorced or otherwise decide to sever your relationship with your current retirement plan provider, you can keep the money in your old account or decide to move it into a new account.

When you take money from a retirement plan with the intent of moving it to a new one, you have 60 days to complete the rollover and keep your tax-deferred status. Otherwise, you'll get hit with taxes and an early withdrawal penalty. Note that you can generally only make one IRA-to-IRA rollover per year.

There are two ways to complete a rollover: direct and indirect.

Direct Rollover

With a direct rollover, your plan administrator moves funds directly from your current retirement plan to another qualified retirement account on your behalf.

Your current IRA trustee can also make a direct transfer to the new trustee if you're not changing account types. For example, you can't transfer your 401(k) to an IRA with a trustee-to-trustee transfer. The 60-day rollover rule doesn't apply to direct rollovers since you never receive a distribution.

Indirect Rollover

With an indirect rollover, you receive the distribution from your IRA or retirement plan and it's your responsibility to deposit the funds into a new IRA or retirement plan within 60 days.

The distribution may be subject to tax withholding. IRA distributions are subject to 10% withholding, but you can choose a different amount or opt for no withholding. Retirement plans are subject to 20% mandatory holding unless the distribution check is payable to the new plan or IRA.

Rollover rules require you to put the entire distribution into another IRA, including the taxes withheld. You'll need to make up the difference with your own funds.

What Happens if You Miss the 60-Day Rollover Period?

The 60-day rollover period starts the date you receive a distribution from your retirement plan or IRA. If you miss the deadline, you may not be allowed to make your rollover contribution unless you qualify for a waiver. Without a waiver, the distribution counts as taxable income for that year. And if you're under age 59½, you could also face an early withdrawal penalty unless you qualify for an exception.

Qualifying and obtaining a waiver for the 60-day rule can get complicated, but here are the three ways you can get a waiver:

  • Automatically
  • By self-certifying and, during an audit, the IRS determines you qualify
  • Through a private letter ruling

Automatic Waiver

You may qualify for an automatic waiver if a bank error caused you to miss the deadline, but you have to meet a list of criteria:

  • The financial institution receives your funds within the 60-day rollover period.
  • You followed the institution's process for depositing the funds within the rollover period.
  • The delay is due to an error by the financial institution.
  • The funds are deposited into a retirement plan within one year of the start of the 60-day period.
  • The rollover would have been valid if the financial institution had followed your instructions.


If you miss the deadline but have a valid reason, your new IRA provider may accept a late rollover contribution with a self-certification letter in lieu of an IRS waiver. The letter should explain that your delay meets one of the IRS-approved reasons, which include illness and damage to your home.

Private Letter Ruling

You may be able to request a private letter ruling if you don't qualify for an automatic waiver and don't meet the requirements of self-certification. This is a process where the IRS reviews your situation and determines whether to grant a waiver. There's a $10,000 fee to request a waiver under a private letter ruling and no guarantee the IRS will grant the waiver.

Whatever route you choose, it's best to get your money into a new retirement plan as soon as possible. Without that money in a retirement plan, you'll forgo the tax advantages of having the account, and you'll miss out on the potential growth from having your money invested.

How to Roll Over to an IRA

You can roll over money from an IRA or employer-sponsored retirement plan into a new IRA to keep your tax-deferred benefits. Before you can make the rollover contribution, you'll need to choose a new IRA provider. Here are some factors to consider when you're reviewing financial institutions:

  • Transfer and rollover options: Since your primary short-term goal is to complete your IRA rollover by the deadline, make sure the institution accepts rollover contributions.
  • Investment options: Stocks, bonds, certificates of deposit (CDs), mutual funds and index funds are common investment options.
  • Reputation: Online reviews and recent news can give you an idea of how the company operates and treats its customers.
  • Fees: IRA costs will impact your overall returns, so it's important to minimize fees.

Once you've chosen a provider, submit an application to open a new IRA. If you need to roll over funds from a Roth IRA and a tax-deferred account, you'll need to open two accounts (one traditional IRA and one Roth IRA).

Deposit the rollover funds into the new IRA when your application is approved and you have access to your account. If your employer wrote a check to you, you can endorse it and deposit it into your new IRA. Don't forget, you'll need to also deposit any taxes that were withheld.

Make sure you track your rollover contribution amounts, both before and after the rollover. You'll need this information when it's time to file taxes.

The Bottom Line

Consulting with a financial advisor or tax professional early in the process can make sure you're following the rollover rules correctly. Getting a waiver can be a complicated process, so it's important to be diligent about following the 60-day rollover rule. This safeguards your investment and could save a lot of money in taxes and penalties, helping you maximize your retirement savings.