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It’s an Individual Retirement Account that allows you to transfer money from an employer’s retirement plan when you leave the company. Direct rollovers to Traditional IRAs avoid taxes and penalties, so your entire account balance can continue growing on a tax-deferred basis. Rollovers to Roth IRAs are taxable, but qualified withdrawals are tax-free throughout retirement.
A Rollover IRA offers more flexibility, control and investment choice than a typical employer-sponsored retirement plan. It also provides access to a financial advisor who can help you select investments and manage your portfolio over time.
Your investments must continue working after you retire to keep pace with longer life expectancies and the rising cost of living. If you have other sources of income, you can spend those now while your IRA pursues tax-advantaged growth for the future.
With a Traditional IRA rollover, you can start withdrawals as late as age 70½. You’ll owe taxes only on the money you receive while the balance of your account remains tax-deferred. Withdrawals from a Roth IRA rollover aren’t required at any age, so the entire account could continue growing tax-free for your later years or heirs.
It depends on many factors, including your age, income and type of IRA. With a Traditional IRA rollover, you can make additional contributions until age 70½, as long as you or a spouse has earned income. With a Roth IRA rollover, additional contributions are subject to income requirements.
Note: If you add money after the initial rollover, you may not be able to transfer the account to a new company’s plan in the future. If you want to keep that option open, consider establishing a separate IRA for any additional contributions. Your financial advisor can provide assistance.
No, you can roll over any amount from a company retirement plan. Additional contributions made after the rollover are subject to the same annual limits as any other IRA. Learn more about IRAs.
It depends on how quickly your employer processes the request to move money directly into your new account. Contact the employee benefits or human resources department for an estimated timeframe.
You qualify for both a Traditional and Roth IRA rollover no matter what your income or tax filing status. One key decision is whether to pay taxes now when you complete the rollover (Roth IRA) or later when you take withdrawals (Traditional IRA). A financial advisor can help you decide.
Yes, but you must make the rollover within 60 days of receiving the check. By law, your employer withheld 20% for taxes before issuing you a check. To complete the rollover within the required 60 days, you must either:
If the 60-day deadline expires, the entire account balance is subject to taxes and penalties.
You may be required to pay off the balance of your loan before completing the rollover. If you don't repay the loan, any amount you owe may be subject to taxes and penalties.
Your options include selling the stock, including it in the rollover or transferring shares to a taxable account. The decision depends on many factors, including the stock's original price and current value, as well as your tax situation and investment needs. An advisor can review your circumstances and recommend a course of action.
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.
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.