Not every kind of retirement account allows a tax-free rollover to a traditional IRA and vice versa.

FORBES: Taxes From A To Z (2013): I Is For IRA Rollover

While it might seem crazy to assert that you can have taxes withheld from a distribution that was negated by a 60-day rollover, but the IRS allows you to do a tax-free rollover of a distribution that has been sent to the IRS as withheld income tax, by using substitute funds (see Reg 1.402(c)-2, A-11).

FORBES: Withholding Tax Without Income?