IRA Rollover

What is an IRA Rollover?

Learn how an IRA rollover can provide better control and flexibility for your retirement plan. 

An IRA rollover is the phrase sometimes used when an individual who has a 401k plan wishes to “rollover” their retirement plan into a new IRA.

This process is most commonly referred to as a “401k rollover” or an “IRA rollover”, and normally occurs when an individual changes employers or retires and wants to better control how his or her retirement savings are invested.

If you leave a job for whatever reason and have a 401k account, you traditionally can decide between taking a lump sump (with possible tax penalties), to keep the funds with your old employer (if they allow this), or to arrange a IRA rollover into a new IRA.

An IRA is not an investment itself, but merely an account that holds future investments on your behalf, such as stocks, bond, annuities, mutual funds and money market funds.

The advantage of the IRA rollover is that you can avoid any immediate tax liabilities, and keep your money earning tax-deferred income on track within your retirement plan.

Millions of IRA rollovers take place each year between insurance companies, banks and financial institutions. It is important to make sure that your former employer transfers the funds from your 401k direct to your new IRA account to avoid the mandatory 20% employer withholding charge as prepayment of federal taxes.

The term IRA Rollover can also be applied to a transfer of funds from one IRA to another, also completed in a tax-free manner but under a different set of rules.

The IRA rollover can be utilized for those moving into retirement as well, who would like to consider transferring their savings into an annuity to maximize growth through tax savings and deference into the future. There are several different types of annuities that work well with the IRA rollover, allowing individuals to generate income, compound long term interest on a tax deferred basis, or even index growth to preferred markets.

The Annuities Institute provides objective and independent planning services to help individuals get the most from their retirement plan and IRA rollovers. For a friendly and objective discussion into how annuities could enhance your portfolio, request a personalized interview with Wlos Insurance Agency by clicking here.

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