A rollover IRA is a retirement account that you can use to consolidate the funds you've set aside in various other retirement accounts. Bringing your funds together can give you access to a wider range of investment options and will make the management of your investments much easier. This way, if your retirement savings goals change, you can change the strategy for the management of your money quickly and easily. And make no mistake – your goals will change as your life changes.
A rollover IRA is also known as a target IRA by most financial professionals. What this means for you is that this is the IRA where your money is going to wind up – regardless of where it came from, it's the target or destination of the IRA rollover. Be aware when you're considering a rollover IRA that some types of IRAs can't accept funds from other types of IRAs. Therefore, you'll want to choose a rollover IRA that is of a type that can accept money from all of your old accounts (or, if not all, at least the majority of them).
If you haven't already, this would be an ideal time to enlist the services of a financial professional. Many of the current IRA rollover rules can be very complex, and simple missteps in the IRA rollover process can lead to significant costs, in terms of unnecessary taxes, fees or penalties. This really isn't an arena that you'll want to walk into by yourself.
Once you've determined the type of rollover IRA to set up, the next thing to remember is that in almost every instance, you want to request an IRA direct rollover. As the name implies, this type of transfer occurs when money is moved directly from the administrator of one account to the administrator of the other. The money never comes into your hands. This is vital to protect the tax status of the money you've accumulated thus far. Once you take possession of your money, it can be classified as a withdrawal or a distribution. In that instant, you are subject to mandatory withholding – usually 20% of your account balance – as well as taxes and penalties.
To initiate an IRA direct rollover, contact the administrator of your target IRA and tell him or her to perform an IRA direct rollover; use those exact words. This will begin a legally defined process whereby the administrator of the target IRA will contact his or her counterpart at the old IRA and arrange for the transfer the money, typically using a check or a wire transfer. There will be some paperwork associated with this, but the administrator will be able to help with any questions you may have.
Following these simple rules, you'll be able to use the rollover IRA process to both consolidate your funds and maximize your control over them. This way, as changes in your life necessitate changes in your retirement goals and strategies, you'll have easier access to your retirement savings to make those changes.
Lose a Fortune on Your 401k Rollover
If you do not do any of these correctly:
- Opt for a distribution rather than direct transfer
- Rollover company stock to an IRA
- Choose to rollover to a Roth IRA
- Rollover to your new employer’s 401k
- Rollover post-tax contributions
Something wacky's going on with the beginning of your post. Anyway, I want to mention my IRA has doubled in value since I emptied my 401k into it about 4 years ago. At that point my 401k had dropped by half, so I'm back where I started!
rollover IRA's are a great idea for those that are building a retirement account but life can be unpredictable at times especially for the elderly with their health expenses not to mention most of them can no longer work so I don't think it's fair that the federal government can penalize someone for withdrawing their own money sooner than they had hoped.
I will be looking into IRA's after reading this.
Do you have any suggestions on a good good Investment company that handles the rollover IRA. It sounds like something that I would be really interested in.
I'm still 17 but my Economics teacher mentioned this so I got really curios. Thanks for you information but like it was stated earlier is there a company that can cover the rollover IRA
Very nice tips! I think after retirement you have limited budget and if you need to see better tomorrow you need to invest in some schemes or in properties.
There are many cases where i have seen people suffering after getting retired and they tends to work in some cafes or restaurant to deal with their expenses!
You have a great job by publishing this post as this would surely help elder people and get them rid of every tension!
Is there any chance you could post or two about people who want to retire at an abnormally early age, like in their late 30s/early 40s?
I have just rolled over my IRA. Best thing I ever did.
Ah, yes, if only I had more money to roll over, all would be well.!
I've never heard about IRA, thanks for sharing that
Thanks for this great article. I have a better understanding of IRAs, and after reading the comments here, it looks as though it's something worth getting into.
I just rolled over my 401k into an IRA. It as sitting in old money markets doing absolutely nothing. I now have my financial planner trying to make money with it. I'll cross my fingers.
this is so informative. thanks a lot. retirement is something a person should be ready for.
I once made a really major mistake not using a Rollover IRA when I should have. I'll know better next time. It cost me a lot.
Thanks for the information. a lot of people fail to plan for retirement
Another advantage to an IRA is tax protection from distributions that come from partnerships and royalties.
I am preparing for my retirement as well. Better plan it early than feel sorry for the rest of my life...
I only wish that I had different funds that need consolidating. I'd be happy to have ONE decent retirement fund. If only I had the funds to rollover! All, I'm saying is that it's definitely is a good idea to plan for retirement.
I still don't know what to do when I retire. IRA rollover can be a good choice. Though I'm still weighing the options.
I am 26 years old. By the time im 65 there will be no retirement my generation is seriously screwed!
A 401k rollover, with its choice of any investments has to be the best way to go.......plus I can get it away from my ex company! 🙂
It's important to note that rolling over your IRA doesn't do anything to the amount of money under the IRA umbrella -- it just consolidates your funds into one account. You would generally do this when you've left an employed and they don't want to hold your assets any longer.
Thanks for the great post, I never thought like that before.
I will be looking into IRA’s after reading this articles..
While I'm not close to retirement just yet, this is useful information for the happy day that it will be when it arrives. Thanks for sharing.
You see i've thought this out! I'm already putting cash in the bank at age 17 for retirement. 5k a year for 20 years then 10k for another 20 and i'm set!
Great post. Everyone is taught to save for retirement but not what to do with it when you reach that age. This is the 1st step. Thanks
I´m not sure about this "A rollover IRA"
This rollover idea can be a good one but it can also hurt the retiree because they cannot withdraw from it. Thanks for the tips.
See, this is the thing I do not understand about the US. Why would anyone in their right might gamble with their retirement money. I'm not saying investing is evil, in fact I plan on doing some myself once I have enough money where I feel comfortable to do it. But I would never willingly invest my retirement money in the stock market. I feel bad for the people that did not really understand that was going on with their 401ks and lost thousands of dollars when the economy took a dive.
Great post. Everyone is taught to save for retirement but not what to do with it when you reach that age. This is the 1st step. Thanks
The rollover IRA can helps in streamlining your investments into a unified asset allocation plan. Moreover you can use a single rollover IRA to consolidate assets from more than one retirement plan and are useful in estate planning than employer-sponsored plans.
Borrow money
it 's my first time to know Rollover IRA ,thank you for your informations.
Rolling over your 401k to a self-directed IRA is a great way to purchase investment real estate properties. There are some great deals now in real estate. Purchasing a high rise condos have some of the best deals. IRAs are a great way to purchase. Make sure you have a custodian that allows you to purchase real estate.
Rollover IRA is a big issue, this has cleared some stuff up for us. Many thanks!
Hmm...I've never heard of a rollover IRA. Interesting.
"Bringing your funds together can give you access to a wider range of investment options and will make the management of your investments much easier. "
For most people, it makes there life easier too. Fewer statements, less mail, easier comprehension of where there money is invested.
don't you think playing with retirement money is to risky.... especially after this economic meltdown
Thanks for providing information regarding IRA. We should be prepared for a safe retired life.