Rollover IRA

Rollover IRA

A traditional individual retirement account holding money from a qualified plan or 403(b) plan. These assets, as long as they are not mixed with other contributions, can later be rolled over to another qualified plan or 403(b) plan. Also known as a conduit IRA.

Rollover IRA

An IRA to which one has transferred funds from an employer-sponsored qualified retirement account. 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. It is less commonly called a conduit IRA.

Rollover IRA.

A rollover IRA is an individual retirement account or annuity you create with tax-deferred assets you move from an employer sponsored retirement plan to a self-directed investment account.

If you arrange for a direct rollover, the trustee of your employer's plan transfers the assets to the trustee you select for your IRA. In that case the total value of the account moves from one to the other.

If you handle the rollover yourself, by getting a check from your employer's plan and depositing it in your IRA, your employer must withhold 20% of the total to prepay taxes that will be due if you fail to redeposit the full amount of the money you're moving into a tax-deferred account within 60 days.

The required withholding forces you to supply the missing 20% from another source to meet the deposit deadline if you want to maintain the tax-deferred status of the full amount and avoid taxes and a potential early withdrawal tax penalty on the amount you don't deposit in the IRA.

References in periodicals archive ?
With the addition of AllianceBernstein to our Network, advisors can take advantage of a systematic asset retention program, while offering their clients the added value of a quick and easy way to open a Rollover IRA.
On July 3, she rolls over her account balance from a qualified retirement plan maintained by her former employer into a rollover IRA at Finest Investments.
This temptation arises whenever the advisor can earn a higher level of compensation providing rollover IRA services for the participant than the level of plan-related compensation that would otherwise be earned by the advisor if the participant's assets had remained with the plan.
Additionally, Millennium Trust continues to lead the automatic rollover IRA space by providing technology-based solutions that help many of the nation's largest retirement plan sponsors to lower plan costs, reduce liabilities, and focus on current participants.
On June 10, 2008, he transferred $65,064 back into his traditional IRA, and he transferred another $65,064 back into his rollover IRA on Aug.
Opportunities exist in this very competitive market for the providers who acknowledge investor fee sensitivity and make it easy, especially for existing customers, to transfer idle retirement plan assets into a Rollover IRA," said Julia Johnston-Ketterer, senior director and author of the Investor Rollover Assets in Motion study.
Under this option, you would direct your plan administrator to make a direct and tax-free transfer of funds from your former employer's plan to a rollover IRA at a financial institution of your choice.
For example, if someone has a traditional IRA, a rollover IRA and an SEP, the total RAID can be taken from just one of those plans or split in any way the owner chooses.
The taxpayer then delivered a check for the total asset amount of his IRA made payable to the new plan custodian, to establish the rollover IRA.
We would like to see best practices articulated that suggest allocating 15% to 30% of a rollover IRA portfolio to [guaranteed lifetime income].
During a job transition, you will usually have three options: take a lump sum distribution; leave your assets in the employer-sponsored plan; or move your assets into a Rollover IRA.