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Rollover IRA
What is a Rollover IRA?
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Why is there a separate IRA type for these assets?
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Isn't there another kind of rollover between IRA accounts?
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Wouldn't moving assets from one IRA to another be considered a transfer?
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How do you transfer assets between IRAs?
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Help Topics
Traditional IRA
Roth IRA
Rollover IRA
Coverdell ESA (formerly Education IRA)
Fees
IRA Distributions
Recharacterizations and Conversions
Tax Reporting

ANSWERS

What is a Rollover IRA?

A Rollover IRA is an IRA that is used to hold assets that have been distributed from an employer's retirement plan, such as a 401(k) or Profit Sharing Plan. There is no limit on the amount of money you can rollover.

401(k) plans rolled over into a Rollover IRA, can now also get rolled into a new employer's 403(b), 401(k) or 457 plans.

Why is there a separate IRA type for these assets?

By keeping a Rollover account separate from your regular IRA account, these assets can be segregated from regular annual contributions that an individual may add. This is especially important because if a regular contribution is added to funds received from an employer's retirement plan, these assets cannot be rolled to another employer's retirement plan at a later date.

Isn't there another kind of rollover between IRA accounts?

Yes. There are two kinds of rollovers. A Direct Rollover is discussed above. It is the movement of funds from an employer-sponsored retirement account directly to a Rollover IRA. The second type of rollover involves only IRAs. Individuals are allowed to take a distribution from their IRA and roll those assets from that IRA to another IRA within 60 days of the receipt of the assets. (The funds can even be rolled back into the same IRA.) The same assets that are distributed must be redeposited (i.e., cash out, cash in) and individuals may process these rollovers only once every 12 months.

Wouldn't moving assets from one IRA to another be considered a transfer?

No. The difference between a rollover between IRAs and transfers between IRAs is the receipt of assets. If the IRA holder receives assets, it is considered a distribution and the deposit to the IRA is a rollover. Both transactions are reported to the IRS.

If the assets are moved between IRAs by the IRA custodians, and the account holder never receives the assets, it is considered a transfer and it is not reported to the IRS.

How do you transfer assets between IRAs?

You can transfer assets from an IRA you hold at another financial services firm to an IRA at BUYandHOLD. This will be considered a transfer of existing assets, and as such will not be reported as a contribution to your IRA. To transfer all or part of the existing assets you hold in an IRA at another financial services firm, go to the Maintenance area in the "View Your Account" section of our site and click on Printable Forms. Choose the Brokerage Account Transfer Form, or click here, then print the form, complete it and return it to BUYandHOLD as per the instructions on the form.
 

BUYandHOLD, a Division of Freedom Investments does not provide legal or tax advice. Please consult with a tax planning professional or the Internal Revenue Service or their Publication 590, Individual Retirement Arrangements, regarding your personal tax situation. You can obtain Publication 590 by calling 1-800-TAXFORMS or by visiting the IRS website http://www.irs.gov

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