45. To avoid tax consequences, a rollover from a Traditional IRA to another IRA MUST be done within
Answer: C
A rollover from a Traditional IRA to another IRA MUST be done within 60 days.
A rollover from a Traditional IRA to another IRA must be completed within 60 days to avoid any tax consequences. This time frame is critical to ensure that the transaction is considered a tax-free rollover.
A) 30 days.
A 30-day limit for rollovers is incorrect as the IRS allows a longer period. While prompt action is advisable, the requirement is specifically 60 days, making this option insufficient for tax-free treatment.
B) 45 days.
A 45-day period does not meet the IRS regulations for rollovers. The standard requirement is 60 days, meaning that exceeding this timeframe would lead to tax implications, thus making this option incorrect.
C) 60 days.
This option is correct as it reflects the IRS guideline that states a rollover from a Traditional IRA to another IRA must be completed within 60 days. Adhering to this timeframe ensures that the funds are not considered taxable income.
D) 90 days.
A 90-day period exceeds the allowable time for a rollover and is incorrect. The IRS clearly stipulates that the rollover must occur within 60 days to avoid tax penalties, making this option invalid.
Conclusion
The correct answer is 60 days, as this is the IRS-mandated timeframe to complete a rollover without incurring tax consequences. All other options fail because they either underestimate or overestimate the required period, which could lead to unintended tax liabilities. Understanding this timeframe is crucial for effective retirement account management.