IRA Rollover

Every once in a while, we close a chapter on our lives and start a new one. Maybe we're switching jobs, or even careers. When you change careers, you’re going to want to take all those employer-sponsored retirement savings with you. While you could leave it in the account (you likely won’t be allowed to add any more to it once you’re not an employee anymore though), you could also get an IRA rollover.

An IRA rollover is the act of moving your retirement funds from your old employer into an IRA account. This isn’t just like money in your normal bank accounts. Remember: you want to follow retirement benefit rules if you want to not get penalized and keep the tax-deferred status on that money.

While there are lots of rules and exceptions, in general, you have 60 days to get the money taken out of your old account and deposited/invested into your new account. Also, if the rollover money makes it into your hands in that time, 20% of it must be withheld for federal taxes. To avoid this, you can do the direct IRA rollover, which means the money goes straight to your financial institution.

Make like Indiana Jones and watch out for all those penalty fee booby traps.