What Can a Roth IRA Be Rolled Over Into?

Roth IRAs provide a tax-efficient means to save for retirement; however, there may be annual limits on how much can be transferred over.

Direct rollovers involve moving money directly from one pre-tax plan to another without tax withholding being withheld; indirect and 60-day rollovers usually only allow for this once every 12 months.

Tax-Free Withdrawals

Roth IRA investments do not subject their earnings to income taxes when you withdraw them at retirement age or earlier. Traditional IRAs require you to pay income tax upon withdrawing funds at retirement age or earlier.

The IRS does, however, impose a 10% early withdrawal penalty from a Roth IRA before age 59 1/2; this may not be recommended, unless your withdrawal fits one of several exceptions such as buying your first home, paying medical expenses while unemployed or being treated for disability.

If your retirement tax bracket is an area of concern, converting some of your taxable retirement account funds to Roth IRA could be worthwhile this year. Doing so would require paying income tax on any deductible contributions and earnings transferred over; but withdrawals from Roths are tax free after this transition has taken place. It is wise to seek help from financial or tax advisor when carrying out this strategy as this process can be complex and should only be attempted under their guidance.


An Individual Retirement Account, or IRA, imposes tight rules limiting what investments can be placed within it. For example, the IRS does not permit holding collectibles such as gold and bullion in these accounts – along with real estate investments and certain closely held businesses.

Roth IRAs provide you with the flexibility of moving funds from other retirement accounts into it, including traditional IRAs, SEP IRAs and SIMPLE IRAs. While you must pay income tax upon conversion of any funds converted during that year of conversion, subsequent earnings distributions from your Roth are tax-free.

Roth conversion may be worthwhile if you expect to fall into a higher tax bracket during retirement, or to reduce required minimum distributions that might push you over into it. A financial professional can run scenarios to ascertain if the upfront tax bill justifies taking action on any given situation; this decision should be carefully considered prior to taking any step.


If you want to switch from traditional plans into Roth accounts, there are two methods for doing it: either directly transferring the money or doing an indirect rollover. With an indirect rollover, your employer will send you a check with 20% income taxes withheld that must be deposited into your IRA within 60 days or you’ll face paying an additional 10% penalty tax if you’re under age 59 1/2.

Direct rollover is often the preferred solution; your retirement account administrator transfers funds directly from your employer’s retirement account into your IRA. Before attempting this route alone, however, it would be prudent to speak with an advisor on whether it makes sense – missteps could cause unexpected issues down the road.


If you withdraw investments before reaching age 59 1/2, the IRS will take its share in taxes and an early withdrawal penalty. To prevent this from happening, qualified withdrawals within five years (such as purchasing your first home, health insurance premiums during unemployment and disability-related expenses) should be made during that timeframe.

Roth IRAs don’t require required minimum distributions (RMDs) after age 75 or 73, making conversion to one an attractive strategy for people expecting higher tax brackets upon retirement. Conversely, conversion may not make sense for low tax brackets expecting to experience an increase before retiring; furthermore if converted assets later change your mind then conversion cannot be reversed by recharacterizing back into traditional IRAs.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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