Retirement

IRA Rollover Rules

IRA Rollover Rules need to be taken into account when you want to rollover IRA to 401(k) or vice versa. The Internal Revenue Service has rules for IRA rollovers and these rules are adjusted. 

Most workers want to rollover their 401(k) or 403(b) assets to an IRA when they change jobs. Not all companies allow their employees to forward 401(k) assets to an Individual Retirement Accounts but most do. So it shouldn’t be a problem for the majority of the people. However, check this with your plan administrator to see if there is an additional procedure that needs to be finished in order to complete the rollover.

So the first rule regardless of what the IRS put out to rollover IRA is to make sure such a rollover is allowed by the company. 

Current IRA to IRA Rollover Rules

Most IRA policies allow only one rollover per year on IRA to IRA transfers. To rollover IRA, your account type must be the same. So you cannot rollover assets from a traditional IRA to Roth IRA. A conversion must occur prior to the IRA rollover. That said, make sure to convert traditional IRA assets to Roth IRA if applicable.

The IRA rollover isn’t a simple transferring process. The funds are going to be received on your end and you will have sixty days to complete the rollover to another IRA. If you won’t complete the rollover during the given time period – you can apply for an extension to – the IRS will see the amount received as ordinary income which you will be taxed at.

Take note that some banks may charge you additional fees for sending funds to the new IRA. The bank will charge you for both holding your IRA assets and for the process of transferring funds to the new IRA. The whole process of IRA rollover is also known as a direct transfer. We suggest checking the fees with your bank and the plan administrator to see if a rollover is actually going to benefit you.

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