By: Lynn M. Mckeel, Fall 2017 IAC Student Intern
Perhaps you already have started saving for retirement with a Traditional IRA, Roth IRA, 401(k) Plan, or Pension Plan. There may come a time when you decide to close out your existing retirement account and transfer your assets to a different account. This may occur for a number of reasons, including but not limited to, a change in employment, retirement, or spousal inheritance. Sometimes individuals have multiple retirement accounts and may find it easy to manage a single, consolidated account. When this transfer from one account to another IRA occurs, this is known as a Roll Over.
Eligible distributions from existing plans can usually be “rolled over” into a Traditional IRA without incurring any tax penalties through what is known as a “trustee to trustee transfer.” When “rolling over” into a Roth IRA, you may find yourself subject to ordinary income tax.
In 2014, FINRA issued an Investor Alert titled, “The IRA Rollover: 10 Tips to Making a Sound Decision” which guides investors considering such a change. The alert can be accessed here: The IRA Rollover: 10 Tips to Making a Sound Decision. Please be sure to read all ten tips in the link above.
After releasing the Investor Alert, FINRA had a follow up conversation. This five minute video features a question and answers section pertaining to additional considerations when rolling over investment accounts. If you are interested in rolling over investment accounts, we highly recommend that you visit both links in this blog post, consult your tax professional and plan administrator for personalized recommendations, and browse the FINRA website for additional educational resources. Taking the time to sort through your choices may save you thousands of dollars over the course of your lifetime.