Rollover IRAs: Everything You Need to Know

How to roll over funds into an IRA and the rules you have to follow.

By Matthew Frankel, CFP – Updated Dec 11, 2025 at 12:17 PM

Key Points

A rollover IRA allows transfer of funds from other retirement accounts, retaining tax-deferred status.
Direct rollovers are preferable as they avoid mandatory 20% tax withholding, unlike indirect rollovers.
Rollover IRAs offer broader investment choices and potential for lower fees than employer plans.

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Data source: IRS.
Can I Roll Over This Type of Account...	...Into a Roth IRA?	...Into a Traditional IRA?	...Into a SIMPLE IRA?	...Into a SEP IRA?
Roth IRA	Yes	No	No	No
Traditional IRA	Yes	Yes	Yes, after two years	Yes
SIMPLE IRA	Yes, after two years	Yes, after two years	Yes	Yes, after two years
SEP IRA	Yes	Yes	Yes, after two years	Yes
Governmental 457(b)	Yes	Yes	Yes, after two years	Yes
Qualified plan (pre-tax)	Yes	Yes	Yes, after two years	Yes
403(b) (pre-tax)	Yes	Yes	Yes, after two years	Yes
Designated Roth account (401(k), 403(b), or 457(b))	Yes	No	No	No

You'll notice that tax-deferred accounts can roll over into Roth accounts, but not vice versa. Note, however, that when you move pretax savings into a Roth account, you'll owe income tax on the entire amount. Furthermore, that rollover is irreversible under the current tax law. It was once possible to recharacterize Roth IRA contributions as traditional IRA contributions within the same year; however, this option was eliminated by the Tax Cuts and Jobs Act.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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@MattFrankelCFP

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You can use an indirect rollover to withdraw funds for 60 days and then replace them in the same account. This allows you to borrow funds for a very short time, but do this with caution. You could face stiff penalties if you don't return the money within 60 days.

One IRA rollover per year

If you're rolling over funds from a traditional IRA, SIMPLE IRA, or SEP-IRA to another one of those types of accounts, you're eligible to do that only once per rolling 12 months. Importantly, the one-IRA-rollover-per-year rule doesn't apply to rollovers from a tax-deferred IRA account to a Roth account, which is actually a conversion. It also doesn't apply to rollovers to or from employer-sponsored retirement plans.

If you don't follow this rule, every rollover after your first could be subject to the 10% early withdrawal penalty, and you'll have to pay taxes on the distribution. You could also face a penalty for contributing too much to your IRA if you put funds back into your brokerage account that aren't eligible for a rollover.

The same-property rule

When you execute a rollover, you have to contribute the same property that you withdrew from your original brokerage account. If, for example, you received a check for an indirect rollover, bought some stock with the distribution proceeds, and then tried to transfer that stock to another retirement account, you'd violate the same-property rule.

If you violate the same-property rule, the distribution will be treated as a normal withdrawal, which you'll have to pay taxes on, and you could owe a 10% early withdrawal penalty on it as well.

Distributions ineligible for rollover

Some distributions from your workplace retirement plan are ineligible to be rolled over into an IRA. For example, required minimum distributions are ineligible, as are loans and hardship withdrawals.

Limits

There is no limit on the amount you can roll over into an IRA. A rollover will not affect your annual IRA contribution limit either.

There's also no limit to the number of rollover IRAs you can have. However, it's probably easier to manage fewer accounts. You can use the same IRA to roll over funds from multiple accounts. You can also make regular contributions to that IRA, so you don't really need more than one.

Rollover IRAs: Everything You Need to Know

How to roll over funds into an IRA and the rules you have to follow.

Key Points

Related retirement topics

Roth IRA vs. Traditional IRA

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