• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Research 401k

Research401k

401k Advice - 401k withdrawal rules - 401k plans

  • Privacy Policy

IRA (Individual Retirement Account) Rollover v/s IRA Transfers – IRA Rollover Rules

You might think that the terms IRA Rollover and IRA Transfer mean the same thing. While they are similar to each other, they are also different.

IRA Rollover

IRA Rollover is you taking up responsibility of your retirement savings account for upto 60 days before reinvesting it into a new retirement plan

IRA Transfer

IRA Transfer is the movement of your retirement savings and assets from one custodian to another without taking responsibilty of the funds.

IRA Rollover Example

Peter is an accountant and has saved up $40,000 in a traditional 401k retirement savings plan. Peter takes this $40,000, makes the funds payable to himself and wishes to open a new IRA Rollover account with a new 401k broker. Till he finds this broker, he puts all this money into his checkings account with his local bank. Upon finding the new broker, Peter writes a check from his checking account and opens up a new IRA Rollover Account.

IRA Transfer Example

Adam is a computer engineer and has saved up $25000 in his traditional 401k retirement savings plan with his old employer. Upon leaving the company, Adam moves this $25000 amount and wishes to move it to an IRA account and manage this account all by himself. Adam therefore instructs his old 401k administrator to move these funds directly to his new broker account. During this transaction, Adam does NOT have access to his money. After 3 weeks, the $25000 move from Adam’s traditional 401k plan into his new IRA account. This is what is known as a 401k Trustee to Trustee Transfer.

Types of IRA Rollovers

1) From One IRA to Another

All retirement savings from the old IRA account are withdrawn by the retiree and the IRA Custodian writes a check to the retiree. The retiree then stores this money in his checking account for a maximum of 60 days. Within these 60 days, the retiree must rollover these savings to a new IRA account with a new broker such as Charles Schwab. This type of a rollover is limited to once every 12 months.

2) From Employer Sponsored 401k Plan to IRA

The retiree can rollover all the stock options, employment benefits, profit-sharing and annuity payments as well as qualified pension benefits from the Employee Sponsored 401k Plan into an IRA (Individual Retirement Account). This is accomplished by rolling over these funds to a personal checking account, and directly transferring the funds to an IRA (with a new broker) within 60 days.

3) From One Employer Sponsored Plan to Another

Retirement savings can be rolled over from one qualified retirement or deferred compensation plan to another via a Conduit IRA. How does a Conduit IRA work?

-> Your retirement savings are moved to an IRA holding account
-> A few weeks later, these funds can be moved to your new employer’s qualified retirement or deferred compensation plan.
-> Only the funds from the OLD retirement account and any interest earnings on it can be rolled over
-> You will have to wait until your retirement savings are FULLY moved to the new IRA account before you can make any more contributions

Check Out These Related posts:

  1. Withdrawing Penalty Free Distributions from your IRA (Individual Retirement Account)
  2. 401k and IRA Rollovers – Direct IRA Rollover Rules – 20% IRA Withholding Law
  3. 401k Rollover into IRA – Rules, Processes, Time & Fees Involved
  4. 401k and IRA Rollovers – Direct IRA Rollover Rules – 20% IRA Withholding Law

Filed Under: 401k Articles

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Welcome to Research401k.com – A Complete Resource On Important 401k Retirement Plan Topics such as Rollovers, Roth IRA Accounts, Contribution Limits, Hardship Withdrawals, Self-Employed 401k and more!

Latest 401k Articles

  • Uniform Lifetime Table to Calculate 401k Minimum Required Distributions (MRDs)
  • Tax Increase Prevention & Reconciliation Act of 2005 and 401k Retirement Plans
  • Advantages of Making Salary Deferral 401k Contributions
  • Roth IRA Rules – Roth IRA Retirement Planning
  • 401k and IRA Rollovers – Direct IRA Rollover Rules – 20% IRA Withholding Law

Copyright © 2021. Research 401k. All Rights Reserved.

  • Home
  • Contact Us
  • Sitemap
  • Privacy Policy