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With a direct rollover to a Traditional IRA, taxes are deferred until you take withdrawals. With a Roth IRA rollover, you pay taxes now, but all qualified withdrawals are tax-free throughout retirement.Avoid early withdrawal penalties
Rollovers to either a Traditional or Roth IRA don’t incur a 10% federal penalty if you’re under age 59½.Continue tax-advantaged compounding
Investment earnings within Rollover IRAs aren't subject to current year taxes, similar to your company retirement plan. Because money that would otherwise go toward taxes remains in your account, it has the potential to grow faster for the future.Increase investment choice
A Rollover IRA usually offers more investment choices than company retirement plans. It can be funded with thousands of different stocks, bonds, CDs, mutual funds and many other investments.Gain more control over assets
With a Rollover IRA, you can buy, sell or exchange investments based solely on your needs rather than an employer's plan policies and restrictions.Consolidate retirement assets
A Rollover IRA can be your central account for housing all other IRAs and any assets still held at former jobs. Combining them makes it easier to manage paperwork, track returns and view your investments as a whole.
Before making any decisions, ask a financial professional to explain your options for transferring a company retirement account.
Withdrawing plan assets in one lump sum not only incurs taxes and possible penalties, but also eliminates any future tax-advantaged growth.
A rollover is a good time to determine how your investment plans might change as you transition to a new job or retirement.
To avoid potential taxes, penalties and complications, make sure money goes directly from your current plan to your new account. An advisor can help you fill out the necessary forms.
Adding beneficiaries to your account can extend the tax benefits of IRAs to multiple generations of family members.
Before you jump in, you may want to get more specific information regarding rollovers and possible tax ramifications. You can visit www.irs.gov, and refer to Publication 590 - Individual Retirement Arrangements. Consult your advisor or click here for helpful tips on building an investment portfolio to meet your retirement needs and other financial goals.
The information above is not intended to provide and should not be relied on for accounting, legal and tax advice or investment recommendations. The views and strategies described may not be suitable to all readers. Please contact your financial professional or tax advisor for additional information.
Asset allocation/diversification does not guarantee investment returns and does not eliminate the risk of loss.
IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.