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IRA Rollover Professionals
 

Frequently Asked Questions

  1. How important is it to work with an experienced IRA rollover specialist?
     
  2. What is an IRA rollover?
     
  3. Can I consolidate my accounts and receive a 10% match?
     
  4. What’s the best way to take distributions and what if I die prematurely?
     
  5. What are my options when I leave my employer?
     
  6. Is it better to open a traditional (regular) IRA or a Roth IRA?
     
  7. What is a Roth IRA conversion?
     
  8. What are the rules for IRA withdrawals?
     
  9. What are the rules if I inherit an IRA?
     
  10. Part of my 401k plan consists of stock. Can I still implement an IRA rollover?

 


 

Q: How important is it to work with an experienced IRA rollover specialist?

A: Extremely important because one mistake can be very costly … there are no “do-overs. Our representatives have the experience, knowledge and expertise to offer you the best IRA, Roth IRA, or IRA Rollover for your individual needs. We also address the financial needs of “baby boomers” to insure you don’t outlive your money!

 
Q: What is an IRA rollover?

A: An IRA rollover occurs when you transfer funds from a 401k, 401a, 403b, 457, or pension plan, to a traditional IRA. To be eligible for a rollover, you typically must be retired, separated from service, or age 59 ½ or older. You can also roll an existing IRA to a new IRA at anytime.
 

Q: I’m retired and have several 401k accounts totaling $200,000. Can I consolidate my accounts and receive a 10% match on the total?

A: Yes you can implement a tax free IRA Rollover and receive a 10% match on the total, so your beginning balance will be $220,000! ($200,000 X 10%)! We recommend scheduling a free appointment to discuss your options based on your particular situation.
 

Q: What’s the best way to take distributions and what If I die prematurely?

A: We recommend scheduling a free appointment to discuss various payout options for your specific needs! Our software is designed to compare and illustrate various payout options including lifetime income! If you die prematurely, your beneficiary receives the balance of your account, normally without going through probate.

 
Q: What are my options when I leave my Employer?

A: Assuming you’ve been contributing to a 401k, 401a, 403b, 457, profit sharing or pension plan, you generally have 3 options:

1. Request a lump sum withdrawal - this is a very expensive option because your employer is required to withhold 20% mandatory federal taxes. You may also be required to pay a 10% penalty if you are under age 59 ½.

2. Leave the funds with your previous employer - usually not the best idea because your previous employer can change ownership or fund managers, which could directly affect your 401k plan through higher maintnence fees, and or fewer investment options. Also, some companies simply go out of business. You have total control when you roll your funds to your own individual IRA.

3. IRA Rollover - This is usually your best option because trustee to trustee IRA rollovers are always tax free and all of your funds continue to grow tax deferred. Even if you are under age 59 ½ there are no penalites!
 

  Q: I’m 31 years old and want to start saving $200 per month. Is it better to open a traditional (regular) IRA or a Roth IRA?

A: It depends on your particular circumstances, but Roth IRA’s allow you to always withdraw your Roth IRA contributions penalty free and tax free! Traditional (regular) IRA withdrawals are taxable and subject to a 10% penalty if under age 59 ½. If liquidity is an issue, a Roth IRA would be the smarter move.

 
Q: What is a Roth IRA conversion?

A: A Roth IRA conversion is when you switch a traditional IRA to a Roth IRA. There is a tax liability of 20% which must be paid up front. Assuming you rolled your $100,000 IRA to a Roth IRA, you would have to pay $20,000 in Federal taxes (ouch!). In most instances, it would take a number of years to recoup your $20,000 and there is no guarantee you will. The benefit of a Roth conversion is that you and your beneficiaries would always receive tax free income with no required minimum distributions! We suggest contacting your tax advisor or accountant for a Roth conversion recommendation.


Q: What are the rules for IRA withdrawals?

A: There are 3 general rules pertaining to IRA withdrawals:

  1. Prior to age 59 1/2 IRA withdrawals are subject to a 10% penalty, plus income taxes.
  2. Between the ages of 59 1/2 and 70 1/2 IRA withdrawals are subject to income taxes but no penalty.
  3. At age 70 1/2 you must start taking RMD's (Required Minimum Distributions) annually and you are subject to income taxes on the amount of your RMD. There is a 50% penalty on under withdrawals imposed by the IRS!
     

Q: What are the rules if I inherit an IRA?

A: It depend on whether you are a spouse or non-spouse of the deceased.

If you are a Spouse of the deceased

  1. A spouse is allowed to treat an inherited IRA as their own IRA and are allowed to make contributions as allowed by law.
  2. A spouse is allowed to rollover the inherited IRA into their own IRA as long as it's the same type of IRA, i.e., traditional to traditional, or Roth to Roth.
  3. A spouse does not have to take RMD distributions until they reach age 70 1/2 whether it's their IRA or the inherited spousal IRA.

If you are a Non-Spouse of the deceased

  1. A non-spouse is not allowed to treat an inherited IRA as their own and cannot make contributions to it.
  2. A non-spouse may NOT rollover the inherited IRA to another IRA.
  3. A non-spouse must follow IRS guidelines. The entire amount of an inherited IRA must be taken out by December 31st of the 5th year following the death of the original owner.
     

Q: Part of my 401k plan consists of stock. Can I still implement an IRA rollover?

A: If your plan allows you to take in-kind distributions of company stock, be careful! There are special tax rules that apply to company stock in retirement plans, and making the wrong decision could cost you significantly. Although rolling over your company stick in an IRA may allow you to avoid paying taxes and penalties right now, you ay benefit more by using a provision known as NUA (Net Unrealized Appreciation). By having stock shares sent to you in a taxable form, you only have to pay taxes on the cost basis of the stock. However, once you sell the stock, any earnings will be treated as capital gains rather than ordinary income. We suggest contacting your accountant or tax professional.