The average person changes jobs 10 to 15 times during their lifetime. That can mean leaving a trail of retirement accounts behind. Many people are finding that it makes sense to move those funds into a single IRA. The trick is to manage the process carefully in order to avoid triggering fees and taxes.
What is a rollover?
A Rollover IRA lets you transfer employer-assisted plans, such as 401ks, into other retirement accounts for financial advantages. Directly rolling the funds over, rather than withdrawing and then re-depositing them, avoids tax penalties. The money can then continue to accrue tax-deferred earnings.
It’s a good idea to move the account when you leave a job. But if you haven’t done that, don’t worry. It’s not too late. Once you’ve received a retirement account distribution, however, be sure to roll the account over within 60 days to avoid taxation on your distribution.
How do IRA rollovers save money?
In addition to saving taxes through direct transfer, Rollover IRAs allow greater investment options. You can be in control of where your money goes. CDs, stocks or mutual funds are a few of the choices available. And of course, more money in one place can maximize earnings.
In many cases, you can also reduce administrative costs. These costs often do not appear on your statements, but they can take a bite out of your portfolio over time.
What accounts can be rolled over?
Almost any kind of retirement account can be rolled over into a single IRA. These include 401(k), 457(b), 403(b), and Thrift Savings Plans (TSPs). It doesn’t matter how much or how little you have in an account. Any amount of money can be rolled over, because rollovers do not count toward the standard IRA contribution and have no Adjusted Gross Income restrictions.
For more information, call or visit Horizon Bank. One of our representatives will gladly review your options with you, and handle the details of your rollover to simplify the process for you.
Debbie Rollo is a Personal Trust Officer of Horizon Bank servicing Northwest Indiana. For more information on Horizon’s Trust & Investment services contact Debbie Rollo at 219-750-1159 or via email firstname.lastname@example.org