What Is an IRA Rollover?


If you leave your job or once retire, you may transfer the money you’ve invested in an employer-sponsored retirement plan to an Individual Retirement Account (IRA). IRA Rollover is an effective way to keep your money accumulating tax deferred.


You can create an IRA rollover when you move your funds from a 401k, 401a, 403b, 457, profit sharing, or qualified pension plan to a traditional IRA. Qualifying for a rollover, usually, you must be changing jobs, separated from service, or retired.


Using an IRA rollover, you transfer your retirement savings from your former employer plan to an investment strategy at a private financial institution of your choice in line with your financial goals.


An IRA can be tailored to your financial objectives and goals and can use a variety of investment vehicles like Annuities. An annuity is a long-term retirement tool that can be a cornerstone of your financial security and success. It can help you protect and grow your retirement nest egg, or you can turn it into guaranteed lifetime income. Although IRAs typically provide more investment choices than an employer plan, your plan may offer certain investments that are not available in an IRA.

The funds must be deposited in the IRA within 60 days of withdrawal from an employer’s plan, to preserve the tax-deferred status of retirement savings. You can avoid potential penalties and a 20% federal income tax withholding from your former employer if you could arrange for a direct, institution-to-institution transfer.

While you can withdraw the funds from your employer plan as a lump sum, you could incur a potentially sizable income tax liability in the tax year of the withdrawal. Therefore funds would not be able to continue growing tax-deferred.


Something to consider is that distributions from traditional IRAs are taxed as ordinary income and may be subject to a 10% federal income tax penalty if taken before reaching age 59½. Just as with employer-sponsored retirement plans, you must begin taking required minimum distributions from a traditional IRA each year after you turn age 72.

The information in this Blog is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the ­purpose of ­avoiding any ­federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. Neither the information presented nor any opinion expressed constitutes a solicitation for the ­purchase or sale of any security.

1 view0 comments

Recent Posts

See All