Category: Individual Tax Planning
Posted: August 2018
If you need to move your IRA (Individual Retirement Account) or 401(k) Profit Sharing Plan, what should you do?
As long as you follow the rules, this movement of funds is tax-free and allows continual tax-free buildup. This can be accomplished by a direct transfer from your plan to a new IRA or other retirement plan, or by a distribution (payment) to you that you then transfer within 60 days to a "rollover" IRA (or other plan).
If you do not "rollover" to another IRA or qualified plan within the 60 days, you will need to pay a 10% "early withdrawal penalty" tax. If you are over age 59 ½, this penalty does not apply.
If you take the distribution (payment) instead of making a direct transfer, the IRS will "flag" the payment and send you a letter saying you owe a penalty. You will need to provide documentation of the "rollover" to the IRS.
Contact us if you need help handling a retirement account transfer. And, give yourself a "thumbs up" for planning for retirement now!
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