The Top 10 IRA Rollover Mistakes

An IRA rollover can be a smart way to consolidate retirement assets, maintain tax-deferred growth, and align your investment strategy with your long-term goals. But while the rollover process may appear simple, there are many pitfalls that can derail even the most well-intentioned plans. For high-net-worth individuals, the stakes are even higher; unforced errors can trigger unexpected taxes, early withdrawal penalties, or even the loss of a lifetime of retirement savings.

Whether you’re rolling over a 401(k) from a former employer or consolidating multiple IRAs for simplicity and control, precision is key. From IRS rules to timing traps, even one misstep can have costly consequences. That’s why partnering with a team that understands both the tax and investment sides of your financial life is crucial.

At Avidian Wealth Solutions, we offer integrated wealth management through a boutique family office experience. Our in-house team partners with you to coordinate retirement, tax, and estate planning strategies to help you avoid the common mistakes that trip up others and position your assets for long-term success.

Let’s take a closer look at how IRA rollovers work — and the top 10 IRA rollover mistakes to avoid.

How does an IRA rollover work?

An IRA rollover allows you to move funds from a retirement plan (like a 401(k), 403(b), or another IRA) into a traditional or Roth IRA. This process can help you maintain the tax-advantaged status of your retirement assets while gaining more control over investment options and fees.

There are two main types of rollovers:

1. Direct rollover: Your retirement plan administrator transfers funds directly to your IRA. This is the preferred method, as it avoids withholding taxes and minimizes administrative risk.
2. Indirect rollover: You receive the distribution yourself and have 60 days to deposit the full amount into an IRA. If done incorrectly, this can trigger taxes and penalties.

For high-net-worth individuals, rollovers may also intersect with broader planning considerations, such as Required Minimum Distributions (RMDs), backdoor Roth strategies, and multi-generational legacy goals. Understanding the rules — and working with a coordinated team — can help you make the most of this financial transition.

10 IRA rollover mistakes (and how to avoid them)

1. Missing the 60-day deadline

The mistake: You receive a check from your former retirement plan but don’t deposit it into your IRA within 60 days.

The consequence: The amount becomes fully taxable and may be subject to a 10% early withdrawal penalty if you’re under age 59½.

The fix: Opt for a direct rollover to eliminate the risk entirely. If you must take possession of the funds, set a calendar reminder and work with an advisor to monitor the timeline closely.

2. Not withholding for taxes on indirect rollovers

The mistake: You take a distribution and are surprised when 20% is withheld for federal taxes.

The consequence: You only receive 80% of your balance but must deposit the full amount, including the withheld portion, within 60 days to avoid tax consequences.

The fix: Use a direct rollover to skip withholding altogether. If you do go indirect, be prepared to replace the 20% from other funds to complete the rollover.

3. Rolling over Required Minimum Distributions (RMDs)

The mistake: You mistakenly include your RMD in a rollover after age 73 (or 72 if born before 1951).

The consequence: RMDs are not eligible for rollover and doing so can trigger taxes and penalties.

The fix: Work with a wealth advisor to calculate and distribute your RMD separately before initiating a rollover.

4. Rolling over company stock without considering NUA

The mistake: You roll company stock into an IRA, forfeiting favorable tax treatment under Net Unrealized Appreciation (NUA) rules.

The consequence: You could lose out on the opportunity to pay long-term capital gains rates on appreciated stock.

The fix: Discuss your options with a tax advisor before rolling over company stock. In some cases, keeping it outside the IRA may reduce your tax burden.

5. Violating the “one-rollover-per-year” rule

The mistake: You attempt multiple 60-day rollovers between IRAs within a 12-month period.

The consequence: The second rollover is considered a taxable distribution and may trigger penalties.

The fix: Use trustee-to-trustee transfers, which are not subject to the one-rollover-per-year rule, to move money between IRAs as often as needed.

6. Rolling over after a Roth conversion

The mistake: You roll over or recharacterize funds from a Roth IRA after converting from a traditional IRA.

The consequence: The IRS could view this as an early withdrawal or disallowed transaction, creating tax confusion and penalties.

The fix: Understand the five-year rule and avoid unnecessary movement of Roth IRA funds post-conversion. Keep accurate records and work with an advisor to avoid triggering taxable events.

7. Leaving old 401(k) accounts behind

The mistake: You forget or intentionally leave 401(k) accounts at former employers without consolidating or managing them.

The consequence: These accounts can be mismanaged, underperform, or have high fees — and may not fit your broader strategy.

The fix: Roll old accounts into a properly allocated IRA to maintain visibility and control. A wealth manager can help align your rollover with your long-term investment plan.

8. Choosing the wrong IRA provider

The mistake: You select a provider without evaluating fees, investment options, or the level of personalized service.

The consequence: Your retirement assets could underperform or incur unnecessary costs.

The fix: Work with a fiduciary financial advisor who helps you select an IRA custodian that matches your needs, preferences, and risk tolerance.

9. Failing to consider tax implications

The mistake: You roll over pre-tax accounts without considering how future distributions will be taxed.

The consequence: You may face large tax burdens later in retirement or miss out on strategic Roth conversions.

The fix: Coordinate your rollover with a long-term tax plan. Roth conversions, income timing, and tax-bracket management can help optimize your withdrawal strategy.

10. Overlooking beneficiary designations

The mistake: You forget to update or review your IRA beneficiary designations after a rollover.

The consequence: Your retirement assets may not go where you intend, potentially creating probate complications or tax burdens for heirs.

The fix: Review and update beneficiary forms as part of the rollover process. Consider how your estate and legacy plans intersect with your IRA strategy.

Don’t lose your retirement on costly mistakes. Plan for success with Avidian.

An IRA rollover can open the door to more control, flexibility, and strategic planning, but only if executed correctly. For high-net-worth individuals with complex portfolios, the nuances of rollover rules intersect with tax law, estate strategy, and long-term financial goals. Any of the above-mentioned IRA rollover mistakes can create ripple effects across your entire retirement picture.

At Avidian Wealth Solutions, we don’t just show you how to avoid the top 10 IRA mistakes; our in-house team of advisors, tax professionals, and planners work collaboratively to help you:

• Avoid tax landmines during rollovers
• Leverage advanced strategies like Roth conversions or NUA planning
• Coordinate rollovers with broader life events (retirement, inheritance, liquidity events)
• Align strategy with your long-term legacy goals

Ready to talk about how to structure your next IRA rollover? Connect with Avidian at one of our locations in Houston, Austin, Sugar Land, or The Woodlands to build a retirement planning and tax strategy that helps protect what you’ve earned and positions you for what’s next.

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