What does a rollover really mean for you and your savings?
What is a rollover?
Rollover is transferring a pre-retirement payment from one retirement savings account to another without paying the taxes on the money at that time. Rollover can be a great way to move your assets without sacrificing them. But if it’s not done the right way, taking money out of a retirement savings account early can get expensive.
The Benefit of a Rollover
Withdrawing money from a retirement account usually means taxes and a penalty for non- qualified early withdrawal. A rollover allows you to take money out of a retirement savings account and move it to a different one, while still having tax-deferment on those funds.Thus allow the maximum amount of money to grow.1
How To Do It
There are three ways to complete a rollover:
- If the distribution is made out to you, you can deposit all of it or a portion into an IRA or other retirement account within 60 days. This method requires the government to hold on to a percentage of the amount for tax. You will have to use other funds to rollover the full amount.2
- A direct rollover can be done when you ask the account administrator to deposit the money directly over into another retirement plan or to an IRA.
- If you are receiving a distribution from an IRA, you can ask the institution to make the transfer from that IRA into a new one or another type of retirement account.
Utilizing rollover can be an effective way to switch up your retirement plan without sacrificing the money you have saved, as long as it is done correctly. Consult with a financial architect at Miramontes Capital beforehand to ensure the rollover process is conducted without error.
FOR MORE INFORMATION REGARDING ROLLOVER CONTACT MIRAMONTES CAPITAL.
1 “Rollovers of Retirement Plan and IRA Distributions.” Para 2. http://bit.ly/2c7qx8K. Internal Revenue Service.Web. n.d.
2 “Rollovers of Retirement Plan and IRA Distributions.” Para 6. http://bit.ly/2c7qx8K. Internal Revenue Service.Web. n.d.
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