IRA rollover

Individual Retirement Account Rollover

The transfer of funds from a retirement account to an IRA. This usually occurs when an account holder takes a new job or otherwise wishes to take advantage of the tax benefits an IRA offers over, say, a 401(k). Most IRA programs only allow one rollover per year; with a Roth IRA, there is an income limit beyond which a rollover is not allowed. An IRA rollover may be accomplished through a direct transfer or by check; however, a check transfer brings a 20% withholding charge, so account holders are advised to make direct transfers. See also: Automatic Rollover.

IRA rollover

Reinvestment of a lump-sum distribution from an IRA when physical receipt of funds has been taken by the investor. The lump-sum distribution must be deposited in an IRA rollover account within 60 days of receipt to escape taxation. Compare IRA transfer.

IRA rollover.

If you move assets from an employer sponsored retirement plan to an IRA, you've completed an IRA rollover.

You owe no income tax on the money you move if you deposit the full amount into the new IRA within 60 days or arrange a direct transfer from the existing account to the new account.

If you're moving money from an employer's retirement plan to an IRA yourself, the plan administrator is required to withhold 20% of the total.

That amount is refunded after you file your income tax return, provided you've deposited the full amount into the new account on time, including the 20% that's been withheld. Any amount you don't deposit within the 60-day period is considered an early withdrawal and you'll have to pay tax on it.

You might also have to pay a penalty for early withdrawal if you're younger than 59 1/2. But if you arrange a direct transfer from your plan to the rollover IRA nothing is withheld.

References in periodicals archive ?
What is a charitable IRA rollover or qualified charitable distribution?
Still, one would think it would follow on the coattails of the traditional IRA rollover.
Make donor-advised funds an eligible charity for purposes of the IRA rollover law that permits an IRA owner at least 70-and-a-half-years old to exclude from his or her gross income up to $100,000 per year in distributions made directly from the IRA to certain public charities.
To justify that an IRA rollover is in the best interest of a DC plan participant, advisers will face additional compliance and operational work.
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If they have changed jobs and can roll their balance to the new employer's 401(k), the advisor must also consider the costs and benefits of the new plan in addition to the benefits and limitations of an IRA rollover.
Under the terms of the IRA Rollover Law enacted in December 2015, individuals over 70/2 years of age have the opportunity each year from 2016 on to transfer any amount (up to $100,000) from an IRA to a qualified public charity free of any tax.
Additionally, an IRA rollover will defer immediate taxation-including a possible 10% early distribution penalty-and will allow amounts to continue to be invested, and thereby grow, on a tax-deferred basis.
In March, the IRS announced it would follow the Bobrow decision but, acknowledging its contrary guidance in Publication 590, Individual Retirement Arrangements (IRAs), and never-finalized 1981 proposed regulations, said it would delay application of the aggregate limitation until 2015 (see prior Tax Matters coverage: "Rollover Contribution to Second IRA Disallowed," May 2014, page 61, and "Multiple IRA Rollover Case Settled," July 2014, page 84).
408 that would provide that the IRA rollover limitation applies on an aggregate basis.
This strategy for minimizing the marginal income tax rate at which the in-plan Roth IRA rollover is taxed is also advantageous from another perspective.