Not every financial institution is going to meet your expectations when it comes to your individual retirement account. Though Uncle Sam allows you to move your IRA with a rollover, there are some important restrictions on how the rollovers work. If you don't follow the rules, you could find yourself accidentally cashing out your IRA and costing yourself in taxes and penalties.
There aren't a lot of restrictions with IRA rollovers. In fact, the only two as of 2013 involve required minimum distributions and excess contributions. For example, if you inherited an IRA from your grandparent and you're required to take annual distributions, you can't roll it over into an IRA in your name. Similarly, say you contributed $2,000 too much and you're taking that money out to correct it. You can't roll it over into another retirement account.
You can't go rolling your money from an IRA into any account and not expect a tax hit. It has to go into a qualifying account. Traditional IRAs offer flexibility -- you can roll the money into another traditional IRA, simplified employee pension IRA, 457(b) plan, 403(b) plan, 401(k) plan or, if you're willing to pay the taxes on the conversion, a Roth IRA. Roth IRA money, on the other hand, must be rolled into a Roth IRA -- you can't even roll it into a Roth 401(k) or Roth 403(b).
You'll have to act fast once you take the distribution. Well, relatively fast. The IRS allows you 60 days to redeposit the money in a qualified account. Unless you have a major hardship -- say, being imprisoned in a foreign country where you had no contact with the outside world -- you're unlikely to get any extensions. If you miss the deadline, the money is considered permanently withdrawn. Just like any other IRA withdrawal, you'll be stuck paying taxes and early withdrawal penalties.
To prevent people from using their IRAs as short-term self-loans, they're limited to one rollover per account during any 12-month period. That means however you roll the money, you'll have to wait 12 months before you can roll over another distribution from the account. For example, if you roll money from one IRA to a second IRA, you can't roll over any distribution from either of those accounts for 12 months. But, if you take a distribution from a third IRA, you could roll over that money.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."