Rolling Over Your Retirement Plan

 
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If you have an employee-provided retirement plan, there may come a time when you want to roll those funds over to another plan. For instance, you might choose to do this if you leave your job or set up another retirement plan on your own.


Two Types of Rollovers

1. Direct Rollover

Direct Rollovers are paid from your existing plan, directly into either:

your new employer's retirement plan OR your personal IRA

In either case, funds are not distributed to you personally. Instead, rollovers are typically handled via a wire transfer, or sometimes via a check made out to your IRA so that you can deposit it (but not cash it).

To get started, just review the instructions provided with your employer’s plan for complete steps. Then provide that plan’s administrators with the necessary information — such as account number for your new account, and any other necessary personal details.

2. Indirect Rollover

Indirect (sometimes called “60-day”) rollovers are paid to you, for you to roll over yourself. You can request your existing plan administrator to distribute funds to you via a check or wire transfer.

The administrator of your new IRA or employer plan can provide details on what they’ll need in order to accept the rollover funds. You must roll over some or all of the funds by the 60th day after you receive them.

Note: Indirect rollovers can result in tax withholdings or penalties. Be sure to watch for detailed information on this – or ask your plan administrator or tax professional about the potential downsides of this option.
 

       Other things to know about rolling over retirement funds:

  • These funds cannot be rolled over:
  • Hardship withdrawals
  • Required minimum distributions
  • Corrective distributions
  • …and others
  • While some financial advisors may want you to set up a “Rollover IRA” initially, this isn’t actually required.

    However, using this method can be beneficial in certain circumstances, such as when you need to protect funds against creditors, or if you think you may want to roll a portion of your funds back to an employer in the future.

    Talk to a financial advisor for details.
  • If you’re attempting to make an Indirect Rollover, you may be able to have the 60-day requirement waived in special circumstances. Consult a tax professional or your financial advisor for more information.

Have funds you want to roll over, but aren’t sure where to start or which option is right for you? Horizon Bank advisors can help. Contact us for details.