Avoid this fatal IRA rollover error

The IRS allows you to correct most errors. However, there is one error you cannot fix that could seriously harm your retirement funds. It’s a relatively new rule (became effective Jan. 1, 2015), and if you aren’t aware of it, it can cost you dearly. The rule: An individual can only do one 60-day IRA-to-IRA rollover per year (365-day period, not calendar year), regardless of how many IRAs he or she holds. A 60-day rollover refers to when an individual cashes out an IRA and receives custody of the money; they then have 60 days to deposit the money in another IRA before taxes and penalties could be applied. This rule does not apply to direct transfers from one IRA to another. A direct transfer — one in which the money is transferred directly from your IRA with one financial institution to your IRA with another institution — is the preferred method to move your IRA funds. You can do an unlimited number of direct IRA transfers. The IRS considers a check made out to the receiving IRA as a direct transfer so it’s not subject to the one-per-year IRA rollover rule. However, a check made payable to you is