The IRS gives you 60 days to complete a rollover1 when you withdraw funds from any qualified employer plan or other IRA to a new IRA. If you take longer than that, the transaction will be treated as a distribution, and considered taxable income. You could even receive an additional 10% penalty on the withdrawal if you’re younger than 59½.2
Know your contribution limits
The maximum Traditional IRA or Roth IRA contribution is $5,500 for 2016 ($1,000 more if you're age 50 or older).3 If you want to contribute the maximum amount to a Roth IRA, your adjusted gross income (AGI) in 2016 must be below $116,000 if you’re single, and $183,000 if you’re married, filing jointly.
Don’t withdraw funds too early
You can access your Roth IRA contributions anytime, tax free. Never pay taxes on earnings when making qualified withdrawals, which are made after five years of first contributing to any Roth IRA and you are either over age 59 ½, disabled, or buying a first home.
If you take money out of either a Traditional IRA or Roth IRA before you turn 59½ years old, you may face a 10% penalty.
Some exceptions apply, like pre-1987 contributions to a retirement plan, and a retirement plan where you’re still working after age 70½. The rules for required minimum distributions can be complicated, so talk to your tax advisor for additional support.