Which statement is NOT an IRA rollover rule?

Which statement is NOT an IRA rollover rule?

• A. The money must be deposited in the new IRA within 60 days of receipt
• B. Any potentially taxable amount of the rollover is subject to withholding
• C. An IRA may be rolled over only once in any 12-month period
• D. Rollover funds may be withdrawn tax-free

Answer: (D)

Moving funds between IRAs must follow timing and tax rules to be treated as a rollover rather than a taxable distribution. The money must be deposited into the new IRA within 60 days of receipt; missing this deadline converts the distribution into taxable income. If you take a distribution with the intent to rollover, the payer usually withholds 20% of the taxable amount for taxes, and you must replace that 20% from other funds within the 60-day window to complete the tax-free rollover. There’s also a limit that an IRA may be rolled over only once in any 12-month period. Rollover funds being withdrawn tax-free isn’t a blanket rule. Withdrawals from an IRA are taxable unless they meet specific conditions (such as a qualified distribution from a Roth, or distributions after age 59½ with other requirements). So the statement about tax-free withdrawals isn’t a rollover rule.

Moving funds between IRAs must follow timing and tax rules to be treated as a rollover rather than a taxable distribution. The money must be deposited into the new IRA within 60 days of receipt; missing this deadline converts the distribution into taxable income. If you take a distribution with the intent to rollover, the payer usually withholds 20% of the taxable amount for taxes, and you must replace that 20% from other funds within the 60-day window to complete the tax-free rollover. There’s also a limit that an IRA may be rolled over only once in any 12-month period.

Rollover funds being withdrawn tax-free isn’t a blanket rule. Withdrawals from an IRA are taxable unless they meet specific conditions (such as a qualified distribution from a Roth, or distributions after age 59½ with other requirements). So the statement about tax-free withdrawals isn’t a rollover rule.