IRA Rollover - Page 2 Rollover IRAs have some unique qualities. You can move any amount into your account, provided you're moving it from an employer sponsored retirement plan. In other words, you're not limited to the $4,000 annual ceiling on traditional and Roth IRA contributions. And you may be able to move money out of a rollover IRA into a new employer's plan without owing any income tax or penalty if the new plan accepts rollovers. Check with your financial or tax adviser about any potential pitfalls that you can avoid by planning ahead. SETTING UP A ROLLOVER IRA To start the rollover process, you generally fill out an application provided by the financial institution to which you plan to transfer your money. You'll be given a new account number, which you'll need to complete the rollover request form provided by your old plan administrator. When you turn in that form, the administrator of your old plan liquidates your assets and transfers the cash value to your rollover IRA, either electronically or by check. IRA CUSTODIANS The financial institution where you open your rollover IRA is known as the custodian of your account. As custodian, the institution is responsible for making the investments you authorize, keeping track of the paperwork, and reporting investment performance and account balances to you. But because most IRAs are self-directed, the custodian doesn't make investment decisions on your behalf. Nor does it have fiduciary responsibility for the way your investments perform. That means if you decide to put all your money into a risky investment, your IRA custodian isn't responsible for advising against it. The same is true if you keep all your money in a low-interest savings account. Your custodian may charge an annual fee for handling your account — often as little as $10 a year, and rarely more than $50. And if your account balance reaches a certain amount, which the custodian sets, the annual fee may be dropped. << Back     I     Next >>

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Disclaimer: This information is provided with the understanding that the authors and publishers are not engaged in rendering financial, accounting or legal advice, and they assume no legal responsibility for the completeness or accuracy of the contents. Some charts and graphs have been edited for illustrative purposes. The text is based on information available at time of publication. Readers should consult a financial professional about their own situation before acting on any information.