What is an IRA Rollover?
An “IRA Rollover” or “Rollover IRA” is a tax free transfer of funds from a ex-employer’s retirement plan such as a 401k, 403b, 457, or Thrift Savings Plan to an IRA. An IRA Rollover occurs when an employee changes jobs or retires and as a result they are entitled to distribute or “rollover” their previous employer’s retirement plan to an IRA. Learn more about an IRA Rollover.
There are two common methods employees use to save money for retirement: a company-sponsored 401(k) or an Individual Retirement Account (IRA). Both plans involve setting aside a percentage of income in a tax-deferred account, but an IRA works more like a personal savings account. Whenever an employee with an IRA decides to retire, quit or change jobs, he or she can receive the money saved in an IRA as one lump sum. This is known as an IRA rollover. When an employee reaches retirement age, or in some cases a few years younger, the IRA rollover can be converted to a more beneficial retirement account called a Roth IRA. A Roth IRA allows account holders to borrow against the balance with fewer restrictions than a standard IRA. A company-sponsored 401(k) plan, by comparison, places severe restrictions on employee access to accounts. Even if an employee of a company retires or leaves, he or she is not obligated to request an IRA rollover. The account may stay under the auspices of the origi
An IRA (individual retirement account) rollover is a transfer of assets from an existing employer-sponsored retirement plan or IRA to another IRA. This consolidation can help you achieve your asset allocation goals and provide you with access to a broad range of investments, all while maintaining the tax-deferred growth of your retirement assets. WHEN SHOULD YOU ROLL OVER ASSETS TO AN IRA? If you have multiple IRAs with different financial institutions and multiple retirement accounts with different employers, consider an IRA rollover. WHAT ARE THE BENEFITS OF AN IRA ROLLOVER? Achieve a comprehensive asset allocation policy Consolidating all your retirement accounts into an IRA can help you achieve a comprehensive asset allocation policy for your entire portfolio, taking into consideration your goals and risk tolerance. Access a full range of investment choices An IRA gives you access to a much broader range of investments — including standard mutual funds, stocks, bonds, annuities and
If you have an employer-sponsored retirement plan, such as a 401(k) or another tax-deferred account, you may be eligible to rollover the money into a Traditional IRA without incurring a tax liability. Be sure you understand rollover regulations in order to make sure you avoid tax consequences. We recommend consulting your tax advisor before you complete a rollover.
While some companies will allow you to keep any retirement savings you have with them in their plan’s account until you reach retirement age, there is a very good chance you’ll lose some flexibility in how that money is invested. You may also wish to consolidate your retirement plans so that you don’t need to worry about managing several accounts. If that’s true, then one day you may need to make a decision concerning an IRA rollover.
