IRA Rollovers

A rollover from your pension plan, 401k or 403b to an Individual Retirement Plan (IRA) can provide you with more control over the investment portfolio, withdrawals and ownership of your own retirement account. With careful management of your retirement earnings, you can achieve a comfortable retiree lifestyle, better provide for your family, and maintain a cushion that satisfies future needs. We can help you with the many decisions that come with planning for a secure retirement and determining a sound course of action that protects your retirement savings and pension plan.

Almost all distributions from employer plans are eligible for rollover to a Traditional IRA. The main exceptions are:

  • Payments over the lifetime or life expectancy of the participant (or participant and a designated beneficiary).

  • Installment payments for a period of 10 years or more.

  • Required distributions (generally the rules require distributions starting at age 70½ or for certain employees starting at retirement, if later).

  • Payments of employee after-tax contributions.

  • Hardship withdrawals from a 401k plan or a 403b arrangement.

  • If you are eligible to receive a distribution from a tax qualified retirement plan as a result of, for example, termination of employment, plan discontinuance, or retirement, all or part of the distribution may be transferred directly into your Traditional IRA. This is a called a "Direct Rollover." You may also receive the distribution and make a "Regular Rollover" to your Traditional IRA within 60 days. By making a Direct Rollover or a Regular Rollover, you can defer income taxes on the amount rolled over until you are ready to make withdrawals from your IRA. The maximum amount you may roll over is the amount distributed from your employer contributions and earnings combined. You may not roll over any after-tax employee contributions you made to the employer retirement plan. If you are over age 70½ and are required to take minimum distributions under the tax laws, you may not roll over any amount required to be distributed to you under the minimum distribution rules. Also, if you are receiving periodic payments over your, or your and your designated beneficiary's life expectancy, or for a period of at least 10 years, you may not roll over these payments. For a rollover to a Traditional IRA to be valid, it must be completed within 60 days after the distribution from the employer retirement plan.

  • A qualified plan administrator or 403b sponsor MUST WITHHOLD 20% OF YOUR DISTRIBUTION for federal income taxes UNLESS you elect a Direct Rollover. Your pension plan, 401k or 403b sponsor is required to provide you with information about Direct and Regular Rollovers and withholding taxes before you receive your distribution and must comply with your directions to make a Direct Rollover.

The rules governing rollovers are complicated. Be sure to consult your tax advisor or the IRS if you have a question about rollovers.

Rollovers, if properly made, do not count toward your maximum annual contribution. Also, rollovers are not deductible and they do not affect your deduction limits as described above.

If you have questions in regard to whether or not a rollover might be in your best interest, please feel free to Contact Us.

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