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Rollovers & Transfers

There are many reasons for moving retirement funds, but the most common are:

Relocation to another geographic area.

Consolidation of several IRA’s into one account.

To obtain better service, greater safety or convenience.

There are a number of rules you must follow to achieve a tax-free rollover of IRA funds:

You must deposit the funds into another IRA within 60 days of the date you receive them. If you keep any funds, that portion of the money is taxable and may be subject to the IRS penalty on early distributions, unless it represents the return of nondeductible contribution.

You can roll over the funds in any given IRA only once during a 12-month period.

If you are age 70.5 or older when you take funds from your IRA, you cannot roll over your minimum required distribution for the year. If you do, the amount of minimum required distribution will be considered an excess contribution to your new IRA and may be subject to an IRS penalty.

You will have to document your rollover transaction when you file your federal taxes, even though it is not a taxable transaction. This is true because the trustee or custodian of the IRA from which the funds were disbursed is required to report the amount of the distribution to the IRS. Therefore, you must show the IRS that you rolled these funds over within the required 60-day limit.

Transfer

Transfers are somewhat easier than rollovers.

* You can transfer all or part of an existing IRA to a new account.
* The transaction is not reported to the IRS, so there’s no additional documentation on your federal income tax.

There is no limit on the number of transfers you can make within a 12-month period.

If you are 70.5 or older, you cannot transfer your minimum required distribution to another account.

Direct Rollovers & Distributions from Qualified Pension Plans

If you receive a lump sum distribution from a qualified pension plan, you may be able to roll those funds over into an IRA and, thereby, keep them growing tax-deferred until you really need them. If you choose not to roll over all or any portion of your distribution, the portion you do not roll over may be taxable and subject to an IRS early distribution penalty of 10%. It will also be subject to mandatory federal income tax withholding of 20%. Qualified retirement plans include pension, profit sharing, 401 (k), stock bonus, Keogh and 403 (b) plans. You may receive a distribution from a qualified plan because:

You leave your current employer, voluntarily or involuntarily (this does not apply to self-employed persons, unless they are disabled).

The Plan is terminated.

You reach age 59.5

You become totally and permanently disabled (this applies only if you are self-employed).

You receive ownership of a qualified retirement plan account from a former spouse under a qualified domestic relations order.

Your spouse dies and you inherit the funds in his or her qualified retirement plan.

When waiting for funds from a transfer or direct rollover we offer a 20 month rate lock cd, guaranteeing the rate!

**30 days for transfers & 60 days for direct rollovers.

If you have any questions please contact Rhonda DeStasio at 978-977-2255.

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