The IRA rollover is a mysterious thing to many people. Understanding the retirement investment options that you have is critical, and when it comes to IRA accounts, you really need to make sure that you are aware of all of the details of the investment that you are making. When someone created the IRA account and decided that people needed to save for their future, there were many benefits that drew people to the accounts like moths to a flame. However, financial advisors and others haven’t always done their best to explain all of the little details, including rollover options and regulations.
An IRA rollover is when a person transfers their Individual Retirement Account to another brokerage company. This is allowed by IRA rules, but the deposit must be made within 60 after the money is received from the old IRA account. Additionally, there is a rule that states that people can only take ONE rollover per calendar year. That means that if you find a better broker in May and want to transfer your funds to their brokerage firm, you better be sure about your decision. Otherwise, you’ll wind up paying tax, penalties, and other fees and interest because you broke the rules. They won’t stop you from doing a second rollover. They will simply charge you the fees, interest, and penalties after the transaction has completed.
Don’t fear that you are stuck. When it comes to rollovers, you do have some ways to get around things. You are only entitled to one IRA rollover per year. That means that there is one time when you can cash out your IRA, get a check in your name, and re-deposit it into your new account. However, if you find out later in the year that you can do better with yet another broker, there is something that you can do. Simply process the distribution and make the check payable to the new IRA trustee (brokerage firm or broker), and complete what is known as a trustee to trustee transfer. These are direct between trustees and can be done as often as you’d like.
Basically, when it comes to IRA rollover, you are the middleman. You only get one chance to play that role and transfer your funds during the year. If you take yourself out of the equation and do the transfer directly between brokers, you will be able to have unlimited access to transferring your funds.
