ANSWERS: 1
  • A rollover IRA is the recipient of transferred funds from another retirement account. Rollover accounts can be traditional IRAs or other types of retirement accounts.

    Rollover IRAs

    A rollover IRA is not a separate type of IRA. Any IRA that contains rollover funds is a traditional or Roth IRA.

    Traditional IRAs

    A traditional IRA is a retirement account in which the contributed funds are taxable only when they are withdrawn. A penalty applies to withdrawals before age 59 1/2. Annual withdrawals, or distributions, are mandatory starting April 1 of the year following the year in which you reach age 70 1/2.

    Eligible Rollover Accounts

    You can roll over funds from and to any two of these three account types: traditional IRAs, section 403(b) plans and section 457 plans. You can roll over your traditional IRA into a Roth IRA, but you cannot do the reverse. If your employer offers or offered a qualified retirement plan, you can roll over these funds into a traditional or Roth IRA.

    Considerations

    Rollovers may be limited to one per year for each retirement account.

    Warning

    Transfer rollover funds directly from one retirement account to another, or move withdrawn funds into a new account within 60 days to avoid taxes on the withdrawn funds.

    Source:

    IRS Publication 590, Individual Retirement Arrangements (IRAs) (2009)

    Rollover Definition

    More Information:

    Internal Revenue Service

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