Can You Convert a Rollover IRA?
Conversion occurs when an individual completes an action that fulfills an action desired by a business, whether that be subscribing to their newsletter or downloading whitepaper.
Direct rollovers offer an effective means of moving money from an employer-sponsored retirement account into an IRA without incurring taxes or an early withdrawal penalty. But there are certain considerations you should keep in mind before initiating one.
Direct rollovers
Direct rollovers allow funds to pass directly from one plan to the new account without incurring taxes or early withdrawal penalties, providing it is completed correctly. To transfer directly, tell the old plan administrator that you no longer work at their organization and wish to transfer your retirement funds into an IRA or another eligible retirement account. Your brokerage will send a check addressed to “TD Ameritrade FBO John Doe.” Once received by your new IRA or eligible account, this check must be deposited within 60 days; otherwise you must include its value as income and may face an additional 10% tax penalty if under age 59 1/2.
Direct rollovers may be made from 401(k), 403(b), government 457(b) plans and the federal Thrift Savings Plan accounts to traditional, Roth, SEP or SEP IRA accounts directly; this option must only be done once every year under IRS regulations.
Converting assets between traditional IRAs and Roth IRAs or pretax money between traditional IRAs. Conversions, unlike rollovers, are considered taxable events with any converted amount being subject to income tax in the year of conversion. Converting may make more sense in certain situations than rolling over; for instance if an individual expects their tax bracket will increase during retirement they might prefer tax-free withdrawal benefits of a Roth IRA withdrawal instead.
When performing a rollover or conversion, it is vitally important that you keep accurate records. Be sure to record how the process was carried out, the date on which the transfer took place and details about your new IRA custodian; additionally keep records on investment options, fees and any additional information from your old plan.
Before initiating either a direct rollover or trustee-to-trustee transfer, it’s prudent to consult an experienced tax professional. Professional accountants can help ensure your documents are complete and accurate, and help you understand any tax consequences of the transaction. At Nabers Group we can offer assistance for both IRA and Solo 401k rollovers safely and efficiently ensuring a seamless rollover. Contact us now for a quote, and let us help make your retirement decisions as smart as possible. 2019 The Nabers Group. All Rights Reserved. Privacy Policy. Terms of Use. Legal. Site Map and powered by eGenuity. eGenuity is an integrated marketing solution that enables companies to effectively reach consumers online with relevant ads and content. eGenuity’s technology platform, the i-ReporterTM, utilizes aggregated web traffic data as well as other sources to analyze trends, user preferences and purchase intent in order to deliver targeted ads and content aimed at increasing brand visibility and increasing conversions.
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