IRAs, 401(k)s and similar retirement savings vehicles have experienced phenomenal growth over the past several years, both in terms of the number of participants and in the sheer dollar value of those accounts. Unfortunately, the opportunities to run afoul of the qualified withdrawal rules also have grown. These missteps by account owners have not gone unnoticed by either the Internal Revenue Service or the courts.
Failed rollovers and disqualified distributions have become one of the handful of "big-dollar" mistakes that can be made by the "average" taxpayer. Not only is a disqualified distribution or rollover immediately taxed as income but, often, a 10 percent penalty is also imposed.
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