Using an IRA rollover, you can transfer funds from a tax-deferred plan to an individual retirement account (IRA). If you roll funds directly to a traditional IRA, you won’t trigger current income taxes and penalties. The penalties on an early distribution from any tax-deferred retirement plan can run as high as 29% on the total distribution. Don’t make the mistake of asking for a check to be sent or mailed directly to you from your work IRA, 401(k) or 403(b) plan. The chances of you spending that money and receiving the maximum penalty for an early withdrawal are too high.
IRA Rollover Considerations
- 60-day rule
- Pre-tax monies only
- Partial or total rollover
- Year-end fees
- Broker or advisor
- Paying off loans before the rollover
- Roth IRA conversions
Some individuals may have the opportunity to elect to convert their qualified tax-deferred assets to a Roth IRA.
Why?
The main benefit of a Roth IRA conversion is the opportunity to receive tax-free retirement income rather than paying the taxes every time you take a distribution in retirement. Converting to a Roth IRA requires that in the tax year of conversion, you pay the current income taxes on the tax-deferred assets (all pre-tax contributions and earnings) you are converting.
Distribution Method
If and when you do take a distribution from your IRA or Roth, it should be based on:
- Age
- Liquidity requirements
- Income requirements
We are experts in the field of rollovers and retirement accounts. Call us at 1-866-801-3359 to speak with an advisor on your next rollover or submit a secured contact form to request a free consultation.