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Rollover IRAs

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A rollover IRA is designed to let you maintain your retirement savings momentum while allowing you to avoid taxes and penalties, and to keep your assets growing tax-deferred. It’s a great way to keep your money working hard for you.

Are you eligible for a rollover IRA?
If you’ve been participating in your former employer’s 401(k), 403(b), 457, pension, or other retirement plan and are eligible to take a lump sum distribution, you can roll your savings directly into a rollover IRA.

What are your choices ?
Generally, you have four choices when faced with a lump-sum distribution. You can:

  • Take your retirement distribution in a check. If you take your money as a lump-sum distribution, it may be reduced substantially by taxes, leaving you with less to save or spend. If you are younger than age 59 1/2, your distribution may also be subject to an early withdrawal penalty imposed by the IRS.
  • Leave your retirement savings in your former employer’s plan. If you have $5,000 or more in your account, you can leave your retirement assets where they are - in your former employer’s plan. You should keep in mind that you are not permitted to make any additional contributions to your account, and access to plan features and investment choices is limited to those selected by your former employer.
  • Move your retirement savings to your new employer’s plan. If you are eligible to participate in a new employer’s plan, you may be able to transfer your assets and keep your money growing tax-deferred. Your investment choices will be limited to those offered by your new plan.
  • Transfer your retirement savings directly into a Rollover IRA. You can arrange to have your retirement savings rolled directly to an IRA to avoid having your distribution reduced by taxes or penalties. Rolling over to an IRA offers a number of advantages, including a broad range of investment options.

Choosing the right IRA can be tough. Your best bet? Talk to a financial representative  to find out which kind of IRA is the best fit for your needs.

There is no additional tax deferral benefit for annuity contracts purchased in an IRA or other tax-qualified plan, since these are already afforded tax-deferred status. Thus, an annuity should only be purchased in an IRA or qualified plan if you value some other features of the annuity and are willing to incur any additional costs associated with the annuity to receive such benefits.