OVERVIEW

  • A 60-day rollover is another name for an indirect rollover. Your old plan provider sends the funds to you instead of directly to your new plan.
  • You have 60 days to deposit the full amount into your new retirement account.
  • You may use the money during this period, but you must redeposit the full amount before the deadline to avoid taxes and penalties.
  • Distributions from employer plans such as a 401k have a mandatory 20% federal income tax withholding.
  • IRA distributions have a default 10% federal withholding, unless you opt out or select a different rate. IRA withholding is not mandatory.
  • Any taxes withheld are credited toward your federal income tax return for the year you receive the distribution. This is reported on Form 1099-R (Box 4).
  • Missing the 60-day deadline usually makes the amount taxable for traditional accounts.
  • Roth withdrawals are tax-free only if they meet qualified distribution rules. Otherwise, earnings may be taxable, and if you are under age 59½, a 10% additional tax could apply unless an exception is met.
  • No taxes or penalties apply if you deposit the entire amount into a qualified account within the 60-day limit.

Missing the 60-day rollover deadline can turn a tax-free transfer into a taxable withdrawal that may also trigger penalties. 

This guide explains how a 60-day (indirect) rollover works, including what starts the countdown, how federal withholding rules apply, and the one-per-12-month limit for IRA rollovers. You will also learn what to do if the deadline is approaching, safer ways to move retirement funds, and how to report the rollover correctly. 

We’ll also cover situations where the IRS may grant a waiver so that you’ll learn how to avoid unexpected taxes when moving money between retirement accounts.

Download Free Guide >
The Carry Guide to Paying Less in Taxes

The Carry Guide to Paying Less in Taxes

A complete guide to the biggest tax-saving strategies for US business owners, freelancers, self-employed individuals, and side hustlers.

Table of contents

What Is a 60-Day Rollover?

A 60-day rollover is simply another term for an indirect rollover. When moving money from one retirement plan to another, you typically have two options: 

  • In a direct rollover, the funds go straight from your old plan provider to your new plan provider. You never handle the money, which generally reduces the risk of missing deadlines or triggering taxes.
  • In an indirect rollover, the funds are sent to you first, and you then have 60 days to deposit the full amount into your new retirement account. You may use the money during this time, but the full amount must be redeposited before the deadline to avoid taxes and potential penalties.

📝 Note: The term “60-day rollover” comes from this time limit for completing the transfer.

How Does a 60-Day Rollover Work?

When you request a 60-day rollover from a retirement account, your old plan provider may:

  • Send you the funds by direct deposit to your personal bank account, or 
  • Issue a check in your name

By comparison, a direct rollover check is made payable to your new plan provider, not to you.

A 60-day rollover functions somewhat like a short-term loan. There is no rule against using the money once you receive it. You could cash the check and spend the funds if you wish, but you must redeposit the full amount into your new retirement account within 60 days to avoid taxes and possible penalties.

📌 Also read: Direct vs Indirect Rollovers

Funds Get Withheld in a 60-Day Rollover

If a distribution is paid to you from an employer plan such as a 401k, a 20% federal income tax withholding is mandatory. For IRA distributions, the default withholding is 10% unless you choose a different rate or opt out entirely. IRA withholding is not mandatory.

You are responsible for making up the withheld amount from other funds so that the full distribution is deposited into your new retirement account before the 60-day deadline.

✏️ Hypothetical Examples:

  • You request a $10,000 60-day rollover from a 401k. Your old plan provider withholds $2,000 (20%) and sends you $8,000.
  • You request the same $10,000 from an IRA. If you do not change the default rate, $1,000 (10%) is withheld and you receive $9,000. You can change the rate or opt out using Form W-4R.

Any withholding is credited toward your federal income tax return for the year of distribution and is reported on Form 1099-R (Box 4). If you miss the 60-day deadline, the amount becomes taxable, and if you are under age 59½, a 10% additional tax may also apply unless an exception is met.

Penalties, Taxes, and Fees for a 60-Day Rollover

Here are a few notes to keep in mind:

📌 No Taxes or Penalties If Completed on Time

Deposit the full amount into your new retirement account within 60 days to avoid IRS penalties and income taxes.

📌 Missed Deadline Consequences

  • The IRS treats the rollover as a taxable distribution.
  • If you are under age 59½, a 10% early withdrawal penalty may apply.
  • Regular income taxes apply to the withdrawn amount.

📌 Timing Matters

The funds must be in your new retirement account before the 60-day deadline. Mailing a check or starting a transfer does not count — the money must clear into the account on time.

📌 About Fees

The IRS does not charge rollover fees, but your plan provider may. Review their fee disclosures before starting.

📌 Want to avoid the 60-day deadline risk? Use Carry’s direct rollover process for a safer, simpler transfer. Learn how it’s done here.

Can I Use the Money from a 60-Day Rollover?

✅ Yes, You Can Use It Temporarily

Once your old plan provider sends you the funds, you can use them however you want. Many see this as a short-term, interest-free loan — but only if you can repay the full amount into your new plan within 60 days.

📌 Deadline Is Critical

There are no taxes or penalties if you return the full amount on time. Miss the deadline and the IRS will treat it as a taxable withdrawal, with possible penalties.

📝 Other Loan Options from Retirement Plans
 Some qualified plans offer participant loans:

  • Maximum loan is typically the lesser of $50,000 or 50% of your vested balance.
  • A minimum loan of $10,000 may be allowed if the plan permits.
  • Repayment is usually within five years (longer if used to buy a primary residence).
  • Loan availability depends on the specific plan rules.

📌 Also read: IRA Loans Don’t Exist – 4 Things You Can Do Instead.

What Retirement Accounts Are Eligible for a 60-Day Rollover?

Not all retirement accounts can be rolled over using the 60-day method. The IRS sets specific rules for which accounts qualify and where the funds can be transferred. Some accounts have additional restrictions, so it’s important to confirm details before starting. You can reference the IRS Rollover Chart for complete eligibility rules.

Accounts generally eligible for a 60-day rollover include:

  • Traditional IRA
  • Roth IRA
  • 401k
  • Solo 401k
  • SEP IRA
  • SIMPLE IRA (only after the account has been open for at least 2 years)
  • 403b

Important rules to keep in mind:

✅ SIMPLE IRAs have a 2-year waiting period before rollover eligibility.

✅ Designated Roth accounts can only roll to another designated Roth account or a Roth IRA.

✅ After-tax contributions may have different rollover rules.

Whether you can roll funds out of your current plan while still employed depends on your plan’s in-service distribution rules. Many plans only allow this after age 59½, and some do not allow it at all until you leave the company. Most 401k plans, for example, do not permit rollovers while you are still working for the employer.

How Many 60-day Rollovers Can You Do Each Year?

The IRS limits you to one 60-day rollover per 12-month period for IRA-to-IRA rollovers, no matter how many IRAs you own. This limit does not apply to:

  • Direct rollovers from employer plans
  • Trustee-to-trustee transfers

📌 Also read: Transfer vs Rollover Differences

How to Report a 60-Day Rollover

When you complete a 60-day rollover, two different tax forms come into play — one from the account you took the money from, and one from the account you put it into.

Forms you’ll see:

  • Form 1099-R – Issued by the account that sent you the money. This form reports the distribution, but it does not show the date you deposited the funds into your new account.
  • Form 5498 – Issued by the receiving IRA (if applicable) and reports the amount you rolled over.

📝 Note: Box 13 (“Date of payment”) on Form 1099-R is not the rollover date — it’s used for reporting death benefits, not general rollovers.

Tax treatment if you don’t roll over the full amount:

  • If you deposit less than the full amount (for example, because of withholding), the portion you didn’t replace is treated as a distribution.
  • If you’re under 59½: That portion is subject to income tax and a 10% early withdrawal penalty.
  • If you’re over 59½ with a traditional account: That portion is taxed as ordinary income but no 10% penalty applies.
  • If you’re over 59½ with a Roth account: Qualified withdrawals are tax-free, but you must also meet the 5-year rule (five years since your first Roth contribution).

The 60-day clock starts the day after you receive the distribution, so timing matters.

60-Day Rollover: Key Rules to Remember

Here’s a summary of the 60 day rollover rules that you need to remember.

  • Your old plan provider will send the money to you rather than directly to your new plan.
  • You have exactly 60 days from the day after you receive the funds to deposit the full amount into your new account.
  • From an employer plan (like a 401k), 20% withholding is mandatory. From an IRA, the default is 10% unless you opt out or choose another rate.
  • Any amount withheld must be replaced from other sources if you want the rollover to be tax-free on the full amount.
  • Withholding is applied toward your federal tax bill for the year and may be refunded when you file your return.
  • Roll over the full amount on time, and there are no taxes or penalties.
  • Miss the deadline, and the distribution is taxable. If you’re under 59½, you’ll also owe a 10% early withdrawal penalty.

📌 For more guidance on Solo 401k strategies and compliance, explore our related articles below:

Disclaimer:

The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.

To access investment advisory services through Carry Advisors, you must be a client of Vibes on an eligible membership plan. For more information about Carry Advisors’ investment advisory services, please see our Form [ADV Part 2A] (https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=916200) brochure and [Form CRS] (https://reports.adviserinfo.sec.gov/crs/crs_323620.pdf) or through the SEC’s website at [www.adviserinfo.sec.gov] (http://www.adviserinfo.sec.gov/).