IRA Rollover Tax Implications

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Frequently Asked Questions about the IRA Rollover Tax

Posted by admin on May 5th, 2010

One of the primary advantages of having an IRA is that you get to defer taxes on your money until a later time, when you anticipate having to pay less in rollover taxes. As you might expect, you lose that advantage if you have to pay IRA rollover taxes when you move your money between retirement accounts.

But what are the circumstances under which you have to pay IRA rollover taxes and how can you protect yourself from any unnecessary penalties?

First, you should know that there is no IRA rollover tax that you’re required to pay simply because you choose to rollover your money. There may be other fees involved with the transaction, but these shouldn’t be taxes owed to the IRA, provided you don’t take a distribution or withdrawal. So long as your money is directly transferred from one qualified IRA to another, you shouldn’t owe any IRA rollover taxes. (more…)

IRA Rollover Tax Changes – What You Need to Know in 2010

Posted by admin on April 15th, 2010

Of all the IRA rollover tax changes for 2010, the most important ones concern the Roth IRA – one of the more restrictive types of IRA rollover that includes move money into and out of. To gain a better understanding of the 2010 IRA rollover tax changes, you’ll first need to know how a Roth IRA is defined and how it interacts with other types of IRAs. (more…)

2010 Changes to the IRA Rollover Tax Policies

Posted by admin on March 30th, 2010

Generally speaking, if you rollover your money from one IRA to another IRA, there are no IRA taxes involved. Money invested in an IRA is usually tax deferred, meaning that you don’t pay taxes on the money when you earn it, but rather when you withdraw it from the IRA. So long as the money moves from one qualified IRA to another and is not distributed to you, that money maintains its tax deferred status.

But then there are Roth IRAs. Roth IRAs are different from traditional IRAs in one very important way – you contribute to a Roth IRA using after tax dollars. This means that if you move money from a traditional IRA to a Roth IRA, you have to pay IRA taxes on the money when you move it. You may be surprised to find out that that isn’t a bad thing, especially now. (more…)

Understanding IRA Rollover Tax Implications

Posted by admin on March 16th, 2010

Tax planning should be a crucial part of your retirement savings strategy, as simple tax mistakes can easily cut the balance of your retirement accounts in half. Let’s look at some of the most common situations that can trigger IRA rollover tax implications within your retirement plans.

IRA Rollovers from Employer-Sponsored Plans

The most common situation that triggers an IRA rollover tax is the rollover process itself, where funds are moved from an old employer-sponsored 401k or 403b account to a traditional or Roth IRA. Account holders have two major options when initiating an IRA rollover – a direct rollover or an indirect rollover. (more…)