An IRA rollover involves transferring funds from one retirement account to another without tax consequences. Common scenarios include job transitions, consolidating accounts, or seeking better investment options.
There are two main types of IRA rollovers: direct and indirect. Direct Rollover: Custodian-to-custodian transfer, avoids potential taxes and penalties. Indirect Rollover: Account holder takes possession, must complete transfer within 60 days.
Rules and limits imposed by the IRS for proper functioning of retirement accounts. 60-Day Rule, Once-Per-Year Rule, Roth IRA Conversion Taxes, Rollover Eligibility, and RMD restrictions.
Process for transferring funds between retirement accounts without taxes or penalties. Rollovers not allowed for Required Minimum Distributions (RMDs).
Advantages of an IRA rollover include facilitating tax-advantaged growth, providing consolidation of multiple retirement accounts, offering increased investment flexibility, enabling the avoidance of early withdrawal penalties.