Chidlaw Financial is a comprehensive financial services firm committed to helping our clients improve their long-term financial success. Our customized programs help to grow, and conserve our clients’ wealth by delivering an unprecedented level of personalized service.
Should you have any questions or would like more information, please feel free to email me or call me at (415) 453-0939. I look forward to hearing from you.
Rollovers
What is an IRA Rollover?
An IRA Rollover is a tax-free transfer of funds from a tax-deferred plan, such as a 401(k) or a 403(b), to a traditional IRA (Individual Retirement Account). Normally, an IRA Rollover occurs when an employee changes jobs and is entitled to a distribution from the old employer’s 401(k) or 403(b) plan.
By doing an IRA Rollover, the tax-deferred status of the funds accumulated can be preserved. Understanding the short and long term tax implications is critical. That’s because employer-sponsored retirement plans and IRAs are to help you build a retirement nest egg. Unintended tax consequences could have a severe negative effect on your retirement savings.
The term “IRA Rollover” can also be applied to the transfer of funds between one IRA and another. Again, unless the proper procedures are followed…adverse tax consequences could occur costing you precious time and money.
Direct Rollovers
A direct rollover is sometimes called a “plan-to-plan” transfer. In this case, the funds are transferred directly from the employer-sponsored plan to the now former employee’s IRA. This is often the best method. Mainly this method allows the former employee to avoid the IRS mandatory withholding rules.
Often the former employee can find the transfer paperwork confusing and intimidating. Many complain that the paperwork is never consistent from one employer plan to another. If this is you…feel this way no longer. Chidlaw Financial is very experienced in the finding and implementing the proper procedure.
Indirect Rollovers
Under the indirect rollover method, the employee-sponsored plan writes a distribution check directly to the former employee, who then in turn deposits the check directly into his or her own account. Then the employee must deposit the funds into his or her own IRA. This must occur within 60 days of the check being issued from the employee-sponsored plan. Unfortunately, only 80% of the rollover is available since this method requires the employer to withhold a mandatory 20% for Federal Tax purposes.
If selecting this method…great care must be taken to follow all IRS procedures carefully. Once again, Chidlaw Financial can guide you through these turns to ensure proper compliance.
IRA Consolidation
Many individuals find themselves with “scattered IRAs”. Often the investment strategy for one IRA account is not compatible with another account. We encourage our clients to consolidate their IRAs into a self-directed IRA. Here an overall plan can be devised and implemented. With the ability to see all retirement assets in “one-place”, the effectiveness of your plan can be more closely monitored to be sure it is helping pursue your goals.
Additionally, many come to appreciate the benefits of a self-directed IRA because the investment options span the spectrum of investment alternatives. From conservative money markets and CD’s to more aggressive alternatives in the universe of investments.
In any case…having a well thought out plan for your financial future often includes the use of employee-sponsored plans and your own IRA. Chidlaw Financial can help. Click here to contact us.
Other Considerations
Do you have company stock in your 401(k)? You may qualify for special tax treatment under the rules of NUA…net unrealized appreciation. Here’s an opportunity to save considerable tax dollars upon the sale of the stock. The procedures are specific and need to be followed to the letter. Chidlaw Financial can help.
Are you over 55? You may be able to remove you funds from your employee-sponsored plan and move them to your own self-directed IRA. Thus enjoying the hundreds if not thousands of investment alternatives available to you, but not offered in your employer-sponsored plan. Ask us…we can help.
Chidlaw Financial Specializes In These Issues
We encourage you to contact us either through email, click here or call us directly 415-453-0939. If you have over $100,000 of accumulated retirement funds and are looking for a plan for your future, then contact us today.