Distributions, for the purpose of a rollover, are tax-free as long as the assets are contributed into another IRA within 60 days of receiving the distribution. Assets can be moved between two IRAs of the same type or between a qualified retirement plan (QRP) and an IRA.
By directly rolling over your assets from a retirement plan, you can avoid the mandatory withholding of 20% that applies to all withdrawals from a retirement plan. However, your assets must be eligible for a rollover.
Please note that a direct rollover is not taxable but it is reportable to the IRS. You and the IRS will receive both Tax Form 1099-R and Tax Form 5498 for the tax year in which you completed your rollover. For information that is specific to your situation, please contact your plan administrator or tax adviser.
It is important to note, however, that if you do not deposit the funds into an eligible IRA within 60 days of receiving the withdrawn assets, the amount that you withdrew will be considered income and you will be taxed on that amount.
The distribution from your originating IRA or retirement plan account will be reported to the IRS on Tax Form 1099-R. Depending upon your age, the distribution will be reported as premature or normal. When the "rollover contribution" is made to the receiving IRA, the financial organization will report the transaction to the IRS on Tax Form 5498.
Until a distribution is rolled over into an IRA, it is treated as a taxable transaction in which case IRA withholding rules apply. For information that is specific to your situation, please consult your tax adviser.
Additionally, if you pay the distribution amounts into another (or the same) IRA the amounts may be treated as an excess contribution, which carries a penalty of 6% per year as long as the excess remains in the IRA. For information that is specific to your situation, please consult your tax adviser.
60-Day Restriction — You have 60 days to complete a rollover. The 60 day time period begins on the day after you receive the distribution.
12-Month Restriction — Only one rollover is permitted in any 12-month period. One year must pass from the date of a distribution before you are eligible to roll over another distribution from any of your IRAs. You may not roll over the same assets within 12 months.
Required Minimum Distribution (RMD) Restriction—You are not allowed to roll over your RMD amount. You must first satisfy your RMD before you can roll over assets from one IRA to another IRA.
Irrevocable Rollover Restriction—For Traditional and Roth IRAs, you must irrevocably designate in writing at the time of the rollover deposit that the contribution is to be treated as a rollover.
Generally, when you roll over IRA assets, you will receive a check payable to you. You must deposit that check into your own checking account and then issue a personal check for the IRA rollover. Harbor will not accept a check that is payable to anyone other than Harbor Funds, even if it is endorsed.
Mail the form(s) to the appropriate address below:
First class mail to:
P.O. Box 804660
Chicago, IL 60680-4108
Express or registered mail to:
111 South Wacker Drive
Chicago, IL 60606-4302