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There are several things that you need to know about the IRS’ rollover IRA definition. If the transaction is not conducted properly, you could incur taxes on the entire value of the account. But, don’t worry, it’s not that complicated. First off, there are two transactions that can be used to convert a fund from one custodial company to another. The terms for these transactions are often used interchangeably, which is one of the things that confuse many people. The terms are “rollover” and “transfer”. Transfers are sometimes referred to as “direct-rollovers”. Here’s the difference. Rollovers are reported to the IRS; transfers are not. Under the IRS’ rollover IRA definition, you have 60 days to open a new retirement account with the check that your current custodian will send to you. It is possible to apply for an extension to that 60 day rule, but you must be able to show evidence that you attempted to open a new account, within the 60-day time frame, or that you were physically unable to do so, due to illness, accident, injury, etc. With rollovers, you are in essence a “middle man”, responsible for receiving the check and making every effort to open a new account in a timely manner. You may only take one roll-over within a 12 month period. Transfers are initiated by you, but the fund is transferred directly from one institution to another. The IRS puts no limitations or penalties on transferring the fund, as long as the new custodial company is “approved” by them. Not only cash, but other kinds of assets may be transferred from one account to the other. Many stocks, for example, are transferable assets, as are real estate holdings. Some mutual funds are not. Your current custodial company should be able to advise you concerning the transferable nature of your holdings. There is a specific rollover IRA definition that applies to converting a traditional account to a Roth type. Qualified distributions from a Roth account are not taxed as income, but contributions ARE taxed, during the year in which they are made. So, if you did convert a traditional account, the entire value of the fund would be subject to income taxes during the year that the conversion was made. Many people are unaware that the rollover IRA definition allows them to take a more self-directed approach. You are still required to have a trustee or custodian that manages the account, but you can take more control over your investments…and likely earn more money. The economic turmoil that was going on at the time of this writing caused many retirement investors to lose a great deal of money; an average of 20%, because their fund was so heavily invested in the stock market. Stocks are not the only allowable investment type. For instance real estate, we have a real estate investment where the ROI is guaranteed to be at least double what you earned in your traditional investments, such as stocks, bonds and mutual funds etc. last year. Thats right, at least double what you earned last year. And that is guaranteed! I most strongly urge you to check this information out for yourself. This could be the information you need to finally retire in comfort. Real estate is a much more stable investment. Some areas of the housing market are continuing to “boom”, even as other areas fail. A smart investor will learn everything that he needs to know about the rollover IRA definition AND everything that he can about complete diversification. That’s really the way to go. If you have two minutes to spare, please feel free to check out my website. Gordon Hall is an active participant of a national network of professional writers, who advocate socially conscious real estate investing, through the use of retirement vehicles such as IRAs, 401Ks and other retirement assets. For more information, or to get involved, please visit the following http://www.double-your-ira.com
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