Lightbulb Press - IRA Rollovers

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> >	IRA Rollover Basics The IRA Advantage

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You can put all or part of your lump sum pension or retirement savings plan payout in a rollover IRA.

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IRA Rollover - Page 3

THE IRA ADVANTAGE
A rollover IRA shares the advantages of a traditional IRA. Your principal and any earnings accumulate tax deferred, which means your account value has the potential to grow more quickly than a taxable account with the same rate of return. And you have a wide choice of IRA providers and investments, whether you prefer FDIC insured bank accounts, mutual funds, individual stocks and bonds, or riskier choices such as futures and options. In fact, about the only investments you can't make are coins, artwork, and other collectibles.

Unlike employer plans, which normally allow you to begin withdrawing only after you retire, you can begin taking money out of an IRA without penalty when you turn 59 1/2, even if you're still working.

And you can postpone withdrawals until April 1 of the year after you turn 70 1/2. With some employer plans, you're required to begin taking retirement income when you retire. But with 401(k)s and other salary reduction plans, you have the option of rolling over the balance into an IRA to postpone withdrawals until 70 1/2.

ROLLING DOWN THE FEES
Though you might not choose an IRA just to save money on fees, lower administrative costs are often a bonus of rolling over your 401(k). While there are sales charges on certain transactions, such as commissions on stocks you buy or sell, or fees on mutual funds you own, you can shop around for the combination of advice and expense that suits your investing style.

ONE AT A TIME
Keeping money in a rollover IRA isn't a long-term commitment, even if saving for retirement is. You can use a rollover IRA for a brief period between jobs, until you qualify for a new employer's plan, or for as long as you're satisfied with the investments you can make through the account.

If you never move your rollover IRA into a new employer's plan, it continues to work the same way as any other IRA.

PLAY BY THE RULES
You've got lots of leeway with a rollover IRA, but there are still some rules you have to follow.

Withdrawals before you turn 59 1/2 may result in a 10% penalty in addition to the income tax that is due. You can't borrow against the value of an IRA account, which is often possible with a 401(k). And you can't postpone required withdrawals if you're still working when you turn 70 1/2, as you can with an employer sponsored plan.

You should also check with your tax adviser about whether it's a good idea to combine assets from a former employer's plan with your annual IRA contributions, especially if you think you might ever want to roll the IRA into a new employer's plan.

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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.