Dana Point, CA
Roll Over to an IRA
When you roll over, you transfer your money from your employer’s retirement plan to an IRA in your name. A rollover from your employers’ retirement plan to your own IRA generally gives you greater control of your retirement assets regarding your distribution and legacy strategies, as well as more freedom in choosing investments. It's an option to carefully consider for many reasons including:
- You could gain access to more investment and income options.
- You could have more options for taking withdrawals.
- Typically, a traditional IRA provides flexible beneficiary designations. This enables you to pass on your investments as you wish and can allow your beneficiaries to "stretch" distributions over their life expectancies, creating a "trust-like" situation for generations to come.
- As the account owner, you would be in control over the long term - regardless of where you work.
- Also, by consolidating your former retirement plan(s) into an IRA, you will have one account, one statement, one Required Minimum Distribution (RMD) calculation, and one 1099 form. Consolidation will make it easier to monitor and manage your retirement savings moving forward.
Keep in mind:
If the rollover distribution check is made payable to you, your employer is legally required to withhold 20% for federal income taxes. If you plan on rolling this money into an IRA, to avoid a taxable situation, you must roll over the entire distribution - and make up the 20% federal income tax withholding with other assets (or that amount will be considered taxable) - within 60 days or you will owe taxes on the entire amount. To avoid this mandatory withholding, you must instruct your former employer to make the distribution check payable directly to the financial institution holding your new IRA. In some cases your former employer may mail the check to you, but it will be payable to the financial institution. This is often referred to as a "direct rollover".
If you own company stock in your retirement plan, you may have some additional requirements.
