IRA Rollover from one fund company to another?

Question

When I left my job I did a rollover of my 401K to a IRA Rollover. Now this year I am moving it to another fund company. My question first is ... What type of IRA is a Rollover IRA. ?? is it a traditional or Roth . It is called a Rollover IRA on the paperwork. And when I trasnfer it to the new fund company can I transfer it to a Roth or does it trasnsfer to a Rollover IRA again. Just curious. Thanks all.

Answer 1

You will need to open a regular IRA at the new fund company and ask them to fund the IRA will the rollover proceeds. Then you request a rollover to the new IRA. The IRA on your paperwork refers to a regular (not Roth) IRA.

Answer 2

A Rollover IRA is a fancy name for a Traditional IRA. Traditional IRAs are the "universal recipient", able to accept money from almost any account that has BEFORE TAX contributions (like 401(k), 403(b), 457(b)).

This means your 401(k) was contributed to with BEFORE TAX money. Roth IRAs are contributed to with AFTER TAX money. Unfortunately, you cannnot commingle before-tax and after-tax monies together. So, no, you cannot rollover this to a Roth IRA. You may only roll it over to another Traditional or Rollover IRA.

However, you are allowed to CONVERT your Traditional IRA money into a Roth IRA (so long as you meet the income requirements). You will have to pay the taxes in the year you convert. But once you do, your earnings then becomes tax-exempt, like the rules of a Roth IRA state.

Download a free book at http://www.invest-for-retirement.com and go straight to chapter 24 for more info on retirement accounts.

Answer 3

A rollover IRA can be a traditional or a Roth. Rollover just means that the money came from other qualified retirement plan.

If you want to roll it over to a Roth, be sure to specify that to the new company. Realize that you'll have to pay income tax that year on the entire amount rolled over from a traditional to a Roth IRA.