Is a Rollover IRA Right For You

Rollover IRAs allow you to roll over employer-sponsored retirement plan assets rather than taking a lump sum distribution.  Earnings are able to grow tax-deferred, and distributions are typically taxable in the year distributed. A Rollover IRA also gives you the option of rolling assets back into an employer-sponsored retirement plan at a later date. To help you make a better informed decision about whether or not a Rollover IRA is suitable for you, review the key features table below.

Should you convert your Traditional IRA to a Roth IRA?

Converting a Traditional IRA to a Roth IRA may make sense, but it's not for everyone. The many rules and regulations governing both types of investments can make this decision a complex one. Please consult your tax advisor to discuss your specific needs.

Key Features of a Rollover IRA

Eligibility

You are eligible if you leave a job or receive a retirement plan distribution and you want to keep eligible retirement savings in a tax-deferred account.

Maximum Annual Contribution Limit

There is no limit to the amount you can transfer into a Rollover IRA. However, after January 1, 2015, you can make only one rollover from an IRA to another IRA in any 12-month period.

Catch-up Contributions

Not applicable.

Tax Advantage

Rollover contributions and earnings receive tax-deferred treatment, with no penalties or tax consequences until withdrawal.

Tax Deductibility

None.

Distributions

Required minimum distributions must start at age 70½.

Withdrawals

There is a 10% penalty if withdrawn before age 59½ unless the withdrawal is for:

  • Death or disability of account owner
  • Part of a series of substantially equal periodic payments 
  • Certain major medical expenses
  • Certain medical insurance premiums while unemployed
  • Qualified first time home purchase
  • Qualified higher education expenses
  • IRS levy
  • Qualified reservist distribution

The decision to roll over an IRA should reflect consideration of various factors, the importance of which depend on an investor’s individual needs and circumstances, including, but not limited to, available investment options, fees and expenses, available services, penalty-free withdrawals, protection from creditors and legal judgments, required minimum distributions, and the potential negative tax implications involving employer stock. These are some examples of the factors that may be relevant when analyzing available options and other considerations may apply to your specific circumstances. Please consult with a tax advisor before making any tax related investment decisions.

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. Select a Fund to view the most recent month-end performance information or go to each fund's snapshot page to view most recent month-end performance as well as any waiver or expense reimbursement information.

The information contained in this piece should not be considered legal or tax advice; questions regarding your specific situation should be directed to your legal or tax advisor.

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