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What's an IRA Rollover?

 

If you leave a job or retire, you might want to transfer the money you’ve invested in one or more employer-sponsored retirement plans to an individual retirement account (IRA).  An IRA rollover is an effective way to keep your money accumulating tax deferred.

 

Using an IRA rollover, you transfer your retirement savings to an account at a private institution of your choice, and you choose how you will invest the funds. To preserve the tax-deferred status of retirement savings, the funds must be deposited in the IRA within 60 days of withdrawal from an employer’s plan. To avoid potential penalties and a 20% federal income tax withholding from your former employer, you should arrange for a direct, institution-to-institution transfer.

 

Currently, you can only roll over funds from an employer-sponsored plan to a traditional IRA, but starting in 2008, direct rollovers to a Roth IRA will be allowed (of course, income limits apply to Roth IRA rollovers until 2010, when they are repealed, and ordinary income taxes are owed on all amounts rolled over to a Roth IRA).

 

An IRA can be tailored to your particular needs and goals and can incorporate a variety of investment vehicles, as opposed to the limited number of options available in many employer-sponsored retirement plans. In addition, tax-deferred retirement savings from multiple employers can later be consolidated.

 

Over time, IRA rollovers may make it easier to manage your retirement savings by consolidating your holdings in one place. This can help cut down on paperwork and give you greater control over the management of your retirement assets.

 

Distributions from traditional IRAs are taxed as ordinary income and may be subject to an additional 10% federal income tax penalty if taken prior to reaching age 59½. Just as with employer-sponsored retirement plans, you must begin taking required minimum distributions from a traditional IRA each year after you turn age 70½.

 

Qualified distributions from a Roth IRA are free of federal income tax but may be subject to state, local, and alternative minimum taxes. To qualify for a tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first-time home purchase ($10,000 lifetime maximum). The mandatory distribution rules that apply to traditional IRAs do not apply to Roth IRAs. 

 

To speak with someone regarding an IRA Rollover,  contact:

Faye Bagby

American Financial and Retirement Services, LLC
(972) 733-0026 Dallas Area
16475 Dallas Parkway, Suite 240
Addison, Texas 75001

(877) 588-3330 Midland Office
3105 N. Big Spring St.
Midland, Texas 79705

1-877-588-3330 All Areas

 

 

DISCLAIMER: American Financial and Retirement Services, Inc. (“AFRS”) is not a life settlement provider or life settlement broker. AFRS only advises its clients about purchasing or investing in life insurance policies in the tertiary life settlements market and does not work directly with owners of life insurance policies seeking to enter into viatical or life settlement contracts with life settlement providers. The information contained on this website is intended solely for AFRS’s clients who may be interested in tertiary life settlements and is not intended for and may not be relied upon by persons interested in selling their life insurance policies in viatical or life settlement contracts. No information on this website should be construed as being for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequest or transfer the death benefit or ownership of a life insurance policy or an interest in a life insurance policy pursuant to a life settlement contract. Any individuals interested in selling their life insurance policies in viatical or life settlement contracts should contact any one or more of the life settlement brokers or life settlement providers properly licensed in their state of residence. Void outside the United States and otherwise where prohibited by law.

 
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