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An IRA rollover is a lump-sum distribution deposited from an existing retirement plan into an individual retirement account. The existing retirement plan is frequently a 401k, but it may be any other type of plan. To be eligible for tax-deferral, an IRA rollover must meet certain requirements: 1) the IRA rollover funds must be placed into the new IRA within 60 days of withdrawal from the old account; 2) to avoid a penalty tax on the IRA rollover, the new IRA’s balance must be the same as that of the old account; and 3) only one IRA rollover may occur per year. An IRA rollover can be undertaken on one’s own by requesting a form from the custodian of the old account, or a financial institution can perform the IRA rollover as part of an investment plan; however, the latter choice will limit the number of possible accounts the IRA rollover funds can be put into. |
