Individual Retirement Accounts (IRAs) are very popular these days, but people aren't always sure what they can and can't do with their accounts when it comes to rolling them over. This article looks at some of the most common problems with IRA rollovers. It's important to know that IRA rules change often, so anyone who wants to make a final decision about their IRA should check with up-to-date sources first.
Most of the time, when it comes to saving money for retirement, employees have two options. They can take part in a 401(k) programme offered by their company, or they may also be able to take part in an IRA programme.
In both of these plans, you save money (usually a certain percentage of your income) in a tax-deferred account. However, an IRA is more like a personal savings account than a 401(k). With an IRA, an employee can get all of the money saved in it in one lump sum when they retire, quit, or change jobs. This is called a rollover of an IRA. The key to good IRA management is what the person does with the money.
One thing you can do with the money is put it into a Roth IRA, which is a better retirement account. A Roth IRA gives you more freedom than a standard IRA when it comes to borrowing against the balance. In a 401(k) plan offered by an employer, on the other hand, employees have very limited access to their accounts.
Even if you retire or leave your job, you are not required to take an IRA rollover. In other words, you can't be forced to take the money out of the account. Even if you are working for a different company at the time, you can keep the account with the first one until you reach retirement age.
Most employees have 60 days after leaving their job to put their IRA rollover into a new account or investment plan if they want to move their account. But there are some problems with this, so make sure you talk to an expert before you decide what to do.
All people who have an IRA should know that their money could be lost if they choose to keep their account with a former employer and that company goes out of business or has serious financial problems. Keep in mind that employers' locations often change over time, which can make it hard to know where they are (and where your money is). If you take the IRA rollover when you leave a job, you can put the money straight into a new account and don't have to worry about where your old employer is or how well they are doing.
As was mentioned earlier in this article, IRA rules tend to change often, and it's up to you to know what's new and what's going on. If you need to roll over your IRA, talk to a professional who can show you what your options are and help you make the best choice about where to put your money.
