Rollover IRAs

Almost all distributions from employer plans, including 401(k) and 403(b) plans, are eligible for rollover to a traditional IRA. The main exceptions are payments over the lifetime or life expectancy of the participant (or participant and a designated beneficiary), installment payments for a period of 10 years or more, a loan treated as a distribution, required distributions from your retirement plan, and hardship withdrawals. 

All or part of an eligible rollover distribution may be transferred directly into your traditional IRA. This is called a “direct rollover.” Alternatively, you may receive the distribution and make a regular rollover to your traditional IRA within 60 days. By making a direct or regular rollover, you can defer income taxes on the amount rolled over until you make withdrawals from your traditional IRA. 

Note: If you elect a direct rollover, you will preserve the full tax-deferred status of your assets. If you chose an indirect rollover, the retirement plan administrator must withhold 20% of your cash distribution for federal income taxes. The withholding amount will be returned as a tax credit in the year you complete the rollover if you reinvest the funds in a new plan within the 60 day window. Your plan administrator is required to provide you with information about direct and regular rollovers and withholding taxes before you receive your distribution and must comply with your directions to make a direct rollover. 

The rules governing rollovers are complicated. Be sure to consult your financial or tax advisor or IRS Publication 590-A if you have questions about rollovers.

Yes, if you haven’t rolled over the assets from another traditional IRA within the previous 365 days. A regular rollover from one traditional IRA to another must be completed within 60 days after the withdrawal from the first traditional IRA. After making a rollover from one traditional IRA to another, you must wait one full year (365 days) before you can make another such rollover. However, at any time you may instruct a traditional IRA custodian to transfer assets directly to another traditional IRA custodian; this is called a “direct transfer” and is not considered a regular rollover. Accordingly, a direct transfer isn't subject to the 365-day waiting period described above.

Rollovers, if properly made, don’t count toward the maximum contribution limits. In addition, rollovers aren’t deductible, and they don’t affect your deduction limits as described above.

Yes, taxable distributions from qualified retirement plans or 403(b) arrangements are eligible for rollover or direct transfer to a Roth IRA. Under certain circumstances it may also be possible to make a direct transfer or rollover of a taxable distribution to a traditional IRA and then convert the traditional IRA to a Roth IRA. Consult your tax or financial advisor for further information.

You may transfer or roll over after-tax deferrals from a Roth account under an employer’s 401(k) plan or 403(b) arrangement to a Roth IRA. If such amounts are rolled over to a Roth IRA, they're subject to standard rules for the start date and holding period that apply to your Roth IRA(s).

Yes, if you haven’t received and rolled over the assets from another Roth IRA within the previous 365 days. The rollover must be completed within 60 days after the withdrawal from your first Roth IRA. After making a rollover from one Roth IRA to another, you must wait one full year (365 days) before you can make another such rollover. However, at any time you may instruct a Roth IRA custodian to transfer assets directly to another Roth IRA custodian; this is called a “direct transfer” and isn't considered a rollover. Accordingly, a direct transfer isn't subject to the 365-day waiting period described above.

Rollovers, if properly made, don’t count toward the maximum contribution limits. Also, you may make a rollover from one Roth IRA to another even during a year when you aren't eligible to contribute to a Roth IRA.