What is an IRA Rollover?

What is an IRA Rollover?

An IRA Rollover is the transfer of money from another qualified retirement plan, such as a 401(k) or regular IRA, into another IRA. The IRA receiving the money can be a new IRA or an existing one. Done properly, no withholding is taken out of the former account and no taxes are due the following April. However, any rollover will trigger a reportable item, meaning you will have to indicate you did a rollover on your tax return.

Your retirement money is creditor protected and is tax deferred. You do not want to lose these attractive benefits. Learn everything you can about how and why you should rollover your existing retirement account.

All of this is why I’m here. I’ll explain as detailed or simple as you like, and it’s okay if you don’t understand all of it right now. It all starts with a conversation. Call or email me and we can discuss your situation and see if we should take another step!

What are the Benefits of an IRA Rollover?

An IRA Rollover can simplify your retirement planning.

Whenever you terminate employment after participating in a workplace retirement plan, you will have the opportunity to create a rollover IRA. A Rollover IRA could be an important part of any retirement plan.

A rollover IRA is similar to a regular IRA (traditional IRA) except that the source of the money is not annual contributions. Instead, the money that goes into a rollover IRA is money from a previous retirement plan, such as a 401(k) plan. Although you are permitted to rollover your 401(k) into an existing contributory IRA, you may not combine regular IRAs and Roth IRAs.

One advantage of an IRA rollover is the continuation of the tax-deferred treatment you had at your workplace retirement account. Furthermore, no tax is owed on a property executed rollover, although it is a reportable transaction to the IRS.

How to Do an IRA Rollover and Should You Use an IRA Rollover?

Know the Difference: IRA Distribution vs IRA Rollover
If you take your retirement money as a cash distribution you will have to pay income taxes, and if you are not yet 59.5 years old, your distribution will be subject to a 10% early withdrawal penalty.

Learn Steps Needed To Start an IRA Rollover
Choose a financial institution where you want to open your IRA account. We can help with that.Call your company retirement plan phone number. Tell then you are no longer employed and you would like to rollover your retirement money to your IRA account. They will most likely send you a packet of paperwork you will need to complete. Sometimes they will be able to assist you over the phone.Get help if you don't know how to complete the paperwork. We can help with that.After-tax money cannot be rolled over to a regular IRA account. ROTH 401k money must be rolled to a ROTH IRA account. Regular tax-deferred contributions can be rolled over to a regular IRA account. If you complete the paperwork or the IRA rollover transaction incorrectly it can cause big problems later.

Know the Advantages of an IRA Rollover
More control over your retirement savings. Within your 401k plan or other company plan a set number of retirement options are provided for you and the company may change plan providers at any time.They can make things easier on beneficiaries. Not all company retirement plans offer the same rules as to how your beneficiary can withdraw funds. In an IRA account, your beneficiary will have the option to take distributions out slowly over their life expectancy. They may or may not have this option if the money stays in the company plan.Ability to choose safe retirement options. Company retirement plans do not usually offer a wide selection of choices, like government bonds, certificates of deposit, and fixed annuities. By rolling your money to an IRA in a fixed annuity product you will have different choice without the risk of loss of premium due to market downturns or fluctuation.