An IRA Rollover basically takes the assets you have gained in one IRA account and transfers them to another IRA account. When this is done the right way, assets are protected, there are no penalties, and the tax-deferred status stays the same.
Original IRA accounts may have been started with a former employer or individually. It doesn’t necessarily matter where it was started; it can still be rolled over. Many like to do this to keep assets in the same place and have a singular contribution account. You can add to this new IRA Rollover account with your income or with stocks.
The minimum age that you can remove your money from this account is 59 ½ years. If you keep your money in there after the age of 59 ½, then the maximum increases. This is called a catch-up contribution. The amount for this depends on the year, so ask the insurance agent to make sure that you know the correct maximum contribution limit.
The Rollover Process
There are two types of rollover actions you can take: direct and indirect. Most financial advisors and insurance agents will recommend the latter. This is because a direct rollover involves the direct transfer of your retirement savings to your IRA account provider of choice. In other words, there is no chance of the check getting lost or misplaced. Not to mention, doing a direct transfer means you do not run the risk of your money being taxed during the transfer.
An indirect transfer, on the other hand, is where the money is sent directly to you or the account holder in check form. While this might seem like a good option, there are several issues that can come up. First and foremost, this money will likely be taxed since you withdrew it completely from your account, and even though you will be redepositing it into an IRA.
Furthermore, once you receive the check, you are required to mail it to your IRA account provider within 60 days of its receipt. Failing to do so can result in additional penalties and fines. There is no reason for an individual to choose an indirect transfer unless, for instance, they are doing a partial cash withdrawal. For the best option that fits your situation, contact Best Life Insurance today!
The first process is a direct IRA Rollover. This involves taking the money in the old account and transferring it straight to the new one in what is known as a direct transfer. Most financial advisors recommend this method because there is less chance of the check getting lost in the mail or of something happening to it. It also places less responsibility on you to meet the deadline of sending the check to your IRA within 60 days of receiving it.
Indirect IRA Rollover is the second process. With this, the old account would be closed, you are sent a check with your assets, and you must transfer to a new IRA account.
Someone would do an indirect IRA Rollover because they haven’t found an insurance company that they want to use. But since you have found us at Best Life Insurance, we recommend going with the direct IRA Rollover.