If you are careful, you should not incur any IRA rollover penalties. As long as your custodial company has no fees attached to these transactions, the IRS is the only thing that you have to worry about.
In order to avoid dealing with the IRS, choose your new custodian, now, and have a transfer processed. Transfers are not reported to the IRS, because the fund is transferred directly from one institution to another. Rollovers are reported to the IRS, because a check is made payable directly to you.
If your contributions were all pre-tax or used as tax deductions, then you will incur IRA rollover penalties if:
You do not deposit the fund into another IRS approved plan within 60 days.
You do not request and receive an extension to that 60 day time period.
You do not receive the appropriate paperwork from you new custodian.
You do not attach that paperwork to your year-end tax documents.
You will also incur IRA rollover penalties if you take two rollovers within a 12 month period. There are no frequency limitations on the number of times that you can transfer the fund from one institution to another, although your custodians could charge a fee for the transactions.
If any of your contributions were made with after tax money, as they would be with a Roth, then the amount of those contributions is not subject to taxation. Earnings and interest accrued on those contributions ARE subject to being counted as yearly income.
If you want to convert from a traditional to a Roth account and all of your contributions were made with pre-tax dollars, you will be required to pay taxes on the entire value of the fund, at the time of conversion. Only those who make $100,000 per year or less are allowed to convert to a Roth or make contributions to one, but that limitation will be lifted, at least temporarily in 2010.
Now that I’ve explained the possible IRA rollover penalties, let me take just another moment of your time to give you a little investing advice. I have seen lots of would-be retirees lose lots of money over the last year, because their retirement accounts were so closely linked to the stock market.
Stock market ups and downs can seriously damage your account balance. You’ve worked hard for your money. You’ve lived on less every year, so that you could contribute thousands of dollars to a retirement account. Don’t tie your ability to retire to the volatile stock market.
Transfer your fund to a self-directed custodian that allows real estate and other more profitable investments that are safer, more stable.
We are offering a real estate investment that guarantees you will at the very least double your ROI from last year investments in traditional vehicles such as stocks, bonds and mutual funds etc. I quote: If you don’t experience double returns from the community investments we are involved in, we will pay it ourselves. There that is straight from the corporate mouth. As ever please check out this information for yourselves, you will be very glad you did.
Property values may have gone down slightly over the last year, but they did not decline by 20%, which is the average loss that we have seen in the stock market.
That was the average loss. Some people lost a lot more. Stock market losses can far exceed IRA rollover penalties. Consider a better alternative; real estate. If you have a couple of minutes to spare, please feel free to browse through my website.
