Rollovers, transfers and conversions offer options in managing your retirement funds. In this volatile economic climate, you may find that an IRA is much easier to manage than a 401K or other investment vehicle that is invested in the stock market.
We would not presume to tell you what is best for your unique situation, but we are available to answer questions about our Traditional and Roth IRAs. You should speak to a financial advisor or tax specialist about your plans for the future and retirement in particular.
There are two major types of Rollovers:
- Rollovers between like IRAs.
- Rollovers from a workplace retirement plan to a Traditional IRA.
Rollovers Between Like IRAS:
Rollover is the word used when IRA funds are payable to you and you redeposit them to an IRA of the same type. A rollover is a tax-free movement of funds from one IRA to another IRA of the same type. The amount redeposited to the new IRA as a rollover continues to accumulate tax-deferred earnings in a Traditional IRA, or potentially tax-free earnings in a Roth IRA.
Rollovers are subject to certain restrictions. A distribution must be redeposited within 60 days of receipt to an IRA of the same type to be a valid rollover. You are permitted only ONE rollover from an IRA to an IRA of the same type in a twelve-month period. If you are age 70 ½ or older in the year you receive a distributions from your Traditional IRA, you are not permitted to roll over your required minimum distribution for the year.
Rollovers From Workplace Retirement Plans to Traditional IRAs:
Eligible rollover distributions may be rolled over to a Traditional IRA two ways:
- Direct Rollover- You request that your workplace retirement plan administrator sends the eligible rollover distribution directly to Southern Chautauqua Federal Credit Union as the sponsor of your Traditional IRA.
- You choose to have the eligible rollover distribution made payable to you. Within 60 days of receiving the distribution, you must rollover the distribution to a Traditional IRA.
Transfers: Moving Money Between Like IRAs:
A transfer is a tax-free way to move cash and other assets from one Traditional IRA to another, or one Roth IRA to another.
- In a transfer, the funds are only payable to the IRA sponsor.
- The transfer is not subject to IRS reporting.
- The transfer does not have to be reported on your federal income tax.
- Generally, you may transfer all or part of your IRA to a new IRA sponsor.
- There is no limit to the number of times that you may transfer your IRA.
- Transfers are easy to do.
- The restrictions that apply to rollovers do not apply to transfers.
- Transfers do not have to be done within 60 days.
If you are age 70 ½ or older in the year you request a transfer from your Traditional IRA, you may transfer the entire balance, including your required minimum distribution. However, you must still withdraw your required minimum distribution by the appropriate deadline.