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An IRA Rollover

When you change employment or an employer-sponsored retirement plan is terminated, a special type of IRA called a rollover can be used with a qualified plan distribution in one of two ways:

 

 

1. As a Qualified Plan Conduit:

The qualified plan distribution is transferred to a traditional IRA rollover, where it is held and maintains its tax-deferred status until it is transferred into the retirement plan of a new employer. (assuming the new plan allows incoming transfers)

 

 Retirement Plan Distribution—>Conduit IRA Rollover

–>New Retirement Plan 

 

2. As a Retirement Accumulation Vehicle:

The qualified plan distribution is transferred to a traditional IRA rollover, where the funds are invested and enjoy tax-deferred growth in an IRA until needed for retirement income purposes.

Qualified Retirement Plan Distribution –>IRA Rollover

 

In almost all cases it is better to rollover your qualified retirement plan to either your new employer’s plan or your own IRA.  This will keep you in control of your retirement funds rather than being at the mercy of a past employer’s decisions.

You may ask questions in the comments or contact me privately Tim Barton, ChFC

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