It pays to be careful when moving money from one traditional individual retirement account (IRA) to another or from an employer’s retirement plan to an IRA. Unless you follow certain guidelines, you may find yourself paying taxes on what could have been a tax-free transaction.
60-day time limit. You can withdraw all or part of the assets from your traditional IRA and reinvest them in the same or another traditional IRA. But you don’t have an unlimited time to complete the rollover. For the transaction to be tax free, you must reinvest within 60 days. The same 60-day time limit applies to rolling over an eligible distribution you receive from your employer’s plan (but see 20% withholding below for another potential trap).