What happened if I put money into my Rollover IRA?

Question

I move my 401K from my old employer to a Rollover IRA account in Dec 2006. What will happen if I want to put money into that Rollover IRA? Will I get any tax penalty? Will it become Traditional IRA or Roth IRA?

Answer 1

MHD,

You can roll your 401(k) funds over to an IRA or Roth IRA with the same investment company tax and penalty free. You can also roll it over to an IRA or Roth IRA with an existing IRA tax and penalty free.

The only time you pay is when you take a cash disbursement or move it to a non-retirement account.

Answer 2

If you did a direct rollover you set up either a Roth or a Tradtional IRA - If you didn't have any penalties it was a Traditional. If you want to add money as long as you're under your annual limit you will actually get a Tax Deduction because you're putting the money if after tax instead of before (like you did in your previous 401(k). The only time you'll have a penalty is if you want to make early withdrawals.

Answer 3

Once you rollover your 401K into a Rollover IRA, you cannot add money into that Rollover IRA unless its from another 401K or if you consolidate your traditional IRA.

There will be tax penalties if you withdraw any amount from your Rollover IRA before you turn the age of 59 1/2. So unless you're planning to retire, don't touch the money.

Answer 4

If a bank or investment company rolls it over for you it still remains a Rollover IRA and as long as you have not taken it out your self it will be tax deferred.