IRA rollovers and IRA rollover taxes can be very confusing. This is because most rollover IRA accounts have been set up as a way for you to defer taxation on your income, and any time you deal with the money in these accounts, you’ll be left wondering whether or not you’re going to end up owing the IRS money for taxes. Rest assured, though – it is possible to navigate these tricky waters without owing any unnecessary IRA rollover tax. (more…)
Posts Tagged ‘Tax Planning’
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…)