Rollover Options

A Rollover involves the movement of funds from one investment to another. For instance, when a person retires, an individual retirement account may be rolled over into an annuity or other form of pension plan payout system. Balances in regular IRAs can be rolled over into Roth IRAs, although income taxes will be due on untaxed earnings in the regular IRA account. When a bond or certificate of deposit matures, the funds may be rolled over into another bond or certificate of deposit. A stock may be sold and the proceeds rolled over into the same stock, establishing a different cost basis for the shareholder.

A Lump Sum Distribution can also come from a variety of sources. People retiring from, or leaving a company, may receive a Lump Sum Distribution of the value of their pension, salary reduction or profit-sharing plan. Beneficiaries of life insurance policies may receive a death benefit in a lump sum.

People receiving lump sum payments from their company's pension, profit-sharing, or salary reduction plan - due to retirement or other termination of employment - may roll over the amount into an IRA investment plan within 60 days. Also, current IRAs may be transferred to other investment options or financial institutions within a 60-day period. Through an IRA rollover, the capital continues to accumulate tax-deferred until time of withdrawal. In order to avoid a 20% withholding by the trustee, assets should be rolled over from one place to another as a direct transfer, made by instructing the work place retirement plan trustee to transfer the assets directly to another IRA trustee. Tax-free rollovers may only occur once in a one-year period starting on the date of the first distribution. Otherwise, the distribution amount would be subject to regular income tax and a potential 10% premature distribution penalty. As long as the money is re-deposited within 60 days, there is no tax on the withdrawal, which is considered a tax-free rollover.

Our experienced investment representatives can help guide you through the many choices surrounding your financial future. If you're in a position to rollover your earnings from a former employer's retirement plan to an IRA or have a lump sum distribution to handle, we can help determine the method that's right for you.

For more information please contact a Northeast Investment Representative.