This Is Known As An IRA Rollover

Category: Finance.

IRA s( Individual Retirement Account) are very popular these days, but there is often some confusion as to what a person can and cannot do in terms of rolling the account over.

It is important to understand that IRA rules change often, so the reader is encouraged to check with current sources before making any final decisions concerning his or her IRA. This article will examine a few of the common issues associated with IRA rollovers. In most cases, employees have two choices when it comes to saving money for retirement. These plans both involve putting money aside( usually a percentage of your income) into a tax- deferred account, but an IRA works more like a personal savings account than the 401( k) programs. They can participate in a company sponsored 401( k) program or they may have the other option of participating in an IRA program. With an IRA, when an employee decides to retire, or change jobs, quit, he or she can receive the money saved in an IRA as one lump sum.

What the person does with that money is the key to good IRA management. This is known as an IRA rollover. One thing you can do with the money is to convert it into a more beneficial retirement account known as a Roth IRA. A company- sponsored 401( k) plan, places severe restrictions, by comparison on employee access to accounts. A Roth IRA allows you to borrow against the balance with fewer restrictions than those imposed on a standard IRA. You do not have to take an IRA rollover even if you retire or leave the company. If you wish, the account can remain with the original company until you reache retirement age even if you are working with another company at the time.

In other words, you cannot be forced to take the money out of the account. For those who want to move their account, most employees have 60 days from the time of termination to re- invest their IRA rollover into a new account or investment plan. All IRA account holders should understand that if they elect to keep their account with a former employer and the company goes bankrupt or hits severe financial problems their money may be lost. There are some issues associated with this, so make sure, however you get expert advice before deciding on what to do. Keep in mind that often employers change locations over time, and this can make it hard for you to keep up with where they are( and where your money is) . As mentioned earlier in this article, IRA rules have a tendency to change often and it is your responsibility to keep abreast of what is new and current.

By taking the IRA rollover at termination you can transfer the money directly into a new account, reducing your need to keep up with your past employer s location and financial state. If you find that you are facing an IRA rollover, seek the advice of a professional who can show you the options that you have and help you make the best decision concerning where to put your savings.

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