Who is an IRA Rollover suitable for?
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Getting ready to retire?
You will want to maintain the tax-deferred status of your account and take distributions as needed.
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Changing jobs?
Avoid tax penalties and continue the tax-deferred status of your account without having to deal with your previous employer.
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Consolidating retirement accounts?
Multiple accounts make it difficult to manage your money efficiently.
Tax-deferral from job to job
It is likely that your employer-sponsored qualified plan will be your most important retirement resource. Therefore, you'll want to protect it at all costs.
Don't let a job change put your retirement savings at risk. IRA rollovers were designed to help you maintain the tax-favored status of your retirement assets, even when you leave your job. It is possible to lose nearly half of your retirement account to taxes and penalties if you take a lump sum distribution and don't roll it over to another qualified plan within 60 days.
How it works
"Rollover" simply means moving eligible retirement assets from one retirement investment account to another. A direct rollover allows your assets to move from one custodian to another, without you ever taking possession of the money. This helps you avoid paying such taxes as:
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the 20% withholding tax that applies if you personally receive the distribution, even if you reinvest it in another retirement account;
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income taxes on the amount of your distribution; and
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the 10% early withdrawal tax which generally applies if you are under age 59½.
Although most types of retirement plan accounts can be rolled over to other types of retirement plans, certain types of rollovers can result in the loss of favorable tax benefits. Prior to doing an IRA rollover, please consult your financial advisor to discuss the advantages and disadvantages.
Where did my retirement distribution go?
If you decide not to roll over your retirement plan distribution, you may face significant tax consequences. In fact, if you're under age 59½ and in a high tax bracket, close to half of your distribution may immediately go towards taxes.
Have you already received your retirement plan distribution?
If you have already received your distribution, you can still keep your money growing tax-deferred. You have 60 days from the day you received your distribution to reinvest the assets in an IRA Rollover. Remember that if you do not roll over the entire amount of your distribution — including the 20% withheld by your employer — the taxable portion you do not roll over will be subject to current income taxes and possible early withdrawal penalties.
There's no time to lose if you've already taken hold of your retirement plan assets. Talk to your financial advisor right away about opening an IRA Rollover. Ask your financial advisor whether it makes sense to convert your IRA Rollover to a Roth IRA.
Did you know? Avoid the 20% tax trap
If you take your plan distribution yourself, your employer must withhold 20% of the taxable portion of your distribution. You can still execute a rollover within the required 60 days, but you must make up the 20% difference from other assets, or the IRS will tax the outstanding amount as a distribution. The 20% amount won't be returned to you until you receive your tax refund, if any, for that year. By choosing a direct rollover, you can avoid this 20% tax trap altogether.
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