A rollover is when a person withdraws or takes money out of one retirement account and moves it to another retirement account. If done correctly, then the transfer of money from one account into another is not taxable.
One requirement for a valid retirement rollover is that the retirement plan distribution is an eligible distribution. Distributions that are made because of a hardship, are a required minimum distribution, or are nontaxable already cannot be rolled over.
Another requirement for a valid retirement rollover is that the money must be transferred into the new account within 60 days of receiving the money. If the money is not transferred within the 60 day window, then the money that was not transferred within the timeframe will be completely taxable. Even if you transfer the money into another retirement account on day 61 or any time thereafter, all of the money will be taxable to you.
An additional 10% penalty is applied on money that distributed to a person under the age of 59.5 and that is not rolled over within the 60 day window. If you or someone you know is having tax issues we can be reached at Hoorfarlaw.com or 816-524-4949.