About IRA Rollovers
Rollover means to move money from a 401(k) or other qualified retirement plan into an IRA. If you receive a payout from your company-sponsored retirement plan, choosing a Rollover IRA could be to your advantage. You will continue to receive the tax-deferred status on your retirement savings and you will avoid penalties and taxes (restrictions, limitations and fees may apply).
Making Contributions to a Rollover IRA
The Rollover IRA is usually funded by the eligible distributions from a qualified company-sponsored retirement plan. These distributions can be combined with an existing IRA or placed into a separate IRA. If you create a separate IRA for your Rollover, you can easily move these funds to another employer sponsored plan in the future if the company permits.
Distributions from a Rollover IRA
The distribution rules for a Rollover IRA are the same as the rules for a traditional IRA. Contributions and earnings are taxed when withdrawn after age 59½. Withdrawals before the age 59½ are taxable and subject to an early withdrawal penalty with certain exceptions. Withdrawals must begin by the year after you reach 70½ to avoid penalties.
Direct Rollover
Your employer can directly rollover your retirement plan payout into a Rollover IRA and you will avoid the IRS withholding tax.
Before making any decisions about your pension distributions, be sure to contact us to discuss the options that best fit your needs.
It's a good idea to keep your Rollover IRA separate from any other IRA's you might have because once you make contributions to a Rollover not from a company sponsored plan, you lose the right to move this Rollover to a company sponsored plan in the future.