Rollover IRAs allow you to roll over employer-sponsored retirement plan assets rather than taking a lump sum distribution. Earnings are able to grow tax-deferred, and distributions are typically taxable in the year distributed. A Rollover IRA also gives you the option of rolling assets back into an employer-sponsored retirement plan at a later date. To help you make a better informed decision on whether or not a Rollover IRA is suitable for you, review the key features table below.
Converting a Traditional IRA to a Roth IRA may make sense, but it's not for everyone. The many rules and regulations governing both types of investments can make this decision a complex one. Please consult your tax advisor to discuss your specific needs.
| Feature |
Description |
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Eligibility
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You are eligible if you leave a job or receive a retirement plan distribution and you want to keep eligible retirement savings in a tax-deferred account. |
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Maximum Annual Contribution Limit
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There is no limit to the amount you can transfer into a Rollover IRA. |
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Catch-up Contributions
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Not applicable. |
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Tax Advantage
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Rollover contributions and earnings receive tax-deferred treatment, with no penalties or tax consequences until withdrawal. |
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Tax Deductibility
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None. |
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Distributions
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Required minimum distributions must start at age 70½. |
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Withdrawals
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There is a 10% penalty if withdrawn before age 59½ unless the withdrawal is for:
- Death or disability of account owner.
- Part of a series of substantially equal periodic payments.
- Certain major medical expenses.
- Medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks.
- Qualified first time home purchase.
- Qualified higher education expenses.
- IRS levy.
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