An IRA rollover occurs when you take money out of your IRA or Roth IRA and the distribution is payable to you. You can put the funds in your bank account, spend them, invest them, do anything you want with them (within reason of course). Then, within 60 days, you can put all or part of the distributed amount back into your IRA or Roth IRA. There are no taxes or penalties on this transaction.
But how do you know when the 60 days are up? You do NOT start counting the 60 days from the date you request the distribution, the date on the check, or the date the funds left the IRA account. You start counting the days on the date you receive the funds if they are mailed, or the date they hit your bank account if they are transferred.
NOTE: It is 60 days, not 90 days as many taxpayers seem to believe based on the countless Private Letter Ruling (PLR) requests to IRS we read from individuals begging for an extension to complete a rollover.
It is never a good idea to wait until the last day to complete a rollover. You might find that the bank closed early for a holiday or that your 60th day falls on a weekend. The financial institution could make a mistake and put your funds in a non-IRA account (we’ve seen this happen before). Any number of things could go wrong so you want to complete your rollover as soon as possible – not as the clock is counting down.
In fact, don’t do a rollover at all. You can do a direct transfer from one IRA custodian to another. Then you don’t have any of the problems or issues described above. You worked hard for that money. Don’t lose it because of a careless mistake, procrastination or a bank holiday.