Roll over your retirement funds on time, or else!

Retirement funds can be moved from one retirement account to another with no tax impact, so long as the taxpayer follows a few simple rules. One of the most important rules is that the funds must land in the new account within 60 days of being taken out of the old account.

Seems simple, right? Well believe it or not, plenty of taxpayers miss that deadline. Some of them are just careless, while others try to use the money for the 60 days, but run out of time and miss the deadline. If you miss the deadline, it's expensive because the Internal Revenue Service then treats the money as a distribution of retirement funds. If you're not yet retirement age, you'll pay regular income tax on the money plus a 10% penalty. Between federal and state taxes and penalties, taxpayers usually lose about 50% of their retirement funds if they do an early distribution.

The IRS used to be pretty forgiving, and allowed taxpayers exceptions to the 60 day rule. But word is that the IRS isn't going to be so forgiving anymore, and taxpayers shouldn't count on receiving the benefit of the doubt. The IRS rules regarding retirement accounts are meant to discourage early withdrawals from the accounts via painful penalties. The government thinks we need an incentive to keep our retirement funds intact, and they're probably right.

If you're moving your retirement funds from one account to another, the best way is to have the financial institution transfer the money directly to the new financial institution. Don't tempt fate by letting the money fall into your own hands. If you transfer the money directly, you don't risk the tax problems.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.
What is a Schedule K-1 Tax Form?
The Schedule K-1 is slightly different depending on whether it comes from a trust, partnership or S corporation. Find out how to use this tax form to accurately report your information on your tax return.
Read MoreBrought to you byTurboTax.com
Business Use of Vehicles
If you use vehicles in your small business, how and when you deduct for the business use of those vehicles can have significant tax implications. It pays to learn the nuances of mileage deductions, buying versus leasing and depreciation of vehicles. Special rules for business vehicles can deliver healthy tax savings.
Read MoreBrought to you byTurboTax.com
How to Change Your Tax Filing Status
Choosing your filing status is an important first step for preparing your federal tax return. Your filing status determines your standard deduction, tax rates and brackets.
Read MoreBrought to you byTurboTax.com
A Guide to Self-Employment Taxes for Contractors, Freelancers, and Beyond [Infographic]
If you work for yourself and don't call anyone your boss, you're likely self-employed. This carries advantages, like not having a manager and deciding your own hours. But it also comes with trade-offs, like paying the self-employment tax and paying for your own employee benefits.
Read MoreBrought to you byTurboTax.com