Common Rollover Mistakes to Avoid
Most costly rollover mistakes fall into two groups: errors in how the money moves (taking a check in your own name, missing the 60-day deadline, doubling up indirect rollovers) and errors in what the IRA ends up holding (ineligible coins, metal stored at home). Nearly all of them are avoidable with a direct rollover and a careful look at product eligibility.
Mistakes in Moving the Money
1. Taking the check in your own name
A check payable to you turns a direct rollover into an indirect one. From an employer plan, that means 20% withheld, and to roll over the full amount you'd need to replace it from savings within 60 days. The fix is simple: make sure the check is payable to the new custodian for your benefit. See direct vs indirect rollovers.
2. Missing the 60-day deadline
If money does come to you, the 60-day window runs from the day you receive it. Waiting to open the self-directed IRA until after the check arrives eats into that time. A late deposit is generally taxable and may face the 10% additional tax before the IRS-defined age. The IRS offers limited relief through self-certification for listed reasons. Read the 60-day rollover rule.
3. Making two indirect rollovers of existing account money in 12 months
Only one indirect IRA-to-IRA rollover is allowed per 12 months across all your IRAs. Consolidating several IRAs by having checks mailed to you can break this rule. Transfers don't count, so use them. See the one-rollover-per-year rule.
4. Mixing Roth and pre-tax money
Sending pre-tax money to a Roth IRA is a taxable conversion. Sending Roth 401(k) money to a traditional IRA isn't allowed. Ask the plan to split sources and send each to the matching account.
5. Trying to roll over money that isn't eligible
Required minimum distributions and hardship distributions can't be rolled over under IRS rules. If you're subject to RMDs, take the year's RMD before rolling the rest.
Mistakes in What You Buy and Where It's Kept
6. Buying coins that aren't IRA-eligible
Under 26 U.S.C. 408(m), collectibles bought with IRA money are generally treated as distributions. The exception covers bullion meeting fineness standards (.995 gold, .999 silver, .9995 platinum and palladium) and American Eagle coins. Many collector, numismatic, and some commemorative coins fall outside it, and at least some silver coins sold by dealers are marked not IRA-eligible. Ask for written confirmation of eligibility before purchase. See IRS purity standards and numismatic vs bullion.
7. Storing IRA metal at home
IRA assets must be held by a qualified custodian or trustee. Arrangements that put IRA-owned metal in your personal possession, sometimes marketed as "home storage" setups, can be treated as distributions. The Tax Court has ruled against taxpayers in cases involving personally held IRA metals. See home storage gold IRA risks.
8. Buying metal yourself and "adding" it to the IRA
You generally can't contribute physical metal to an IRA, and selling your own coins to your IRA is a prohibited transaction. The IRA must buy the metal with its own cash through the custodian. The IRS lists examples on its prohibited transactions page.
Mistakes in Choosing Who to Work With
9. Not reading fees, spreads, and buyback terms
Custodian, storage, and dealer pricing all affect what you keep. Ask for every fee in writing and compare the price you pay with what a dealer would pay you to buy the same item back. Pressure to decide quickly or to buy high-premium products is a reason to slow down. Our pages on premiums and spreads and high-pressure sales red flags explain what to look for.
A Quick Self-Check
- Is the receiving account open before the money moves?
- Is every check payable to the custodian, not to you?
- Are pre-tax and Roth sources going to matching accounts?
- Has every product been confirmed IRA-eligible in writing?
- Is the metal going to an approved depository?
- Do you have all fees and buyback terms in writing?
How Goldco Approaches These Points
Goldco, a precious metals company, says IRA metals go to an independent insured depository and that it works with all major self-directed IRA custodians. It advertises a buyback program for IRA-approved coins; read its written terms. Its precious metals specialists are not licensed to give financial, legal, or tax advice. See the Goldco review.
Frequently Asked Questions
Can a rollover mistake be undone?
Sometimes. A missed deadline may qualify for self-certification, and excess contributions can often be withdrawn before the tax deadline. Talk to a tax professional promptly.
What's the single most common rollover mistake?
Receiving funds in your own name instead of having them paid to the new custodian.
Are proof coins allowed in a metals account?
Some proof coins meet IRS standards, such as proof American Eagles, but premiums are typically higher. Confirm eligibility and pricing in writing.