What Is The IRA Rollover And How Does That Work?

What is the IRA rollover and how does that work? Rolling over funds from a defined contribution plan with a tax break is called an IRA rollover. What is commonly done is after years of employment in a corporation...

What is commonly done is after years of employment in a corporation or in some government organization, you have X amount of funds in a defined contribution plan that you have been saving along the way. The IRS allows you to take those dollars and roll them over to an IRA as opposed to taking them personally because once you take them out of the umbrella of the retirement program such as a 401K, the IRS will tax that that income in your taxes so what's commonly done, and we often recommend our clients, is to rollover those defined contribution dollars that they have saved into IRA rollover and then we, with an understanding what their overall retirement needs are and their overall retirement goals are, we develop an investment plan for those money inside the IRA. Often times, the benefits of a rollover or I should say, the benefits of the IRA rollover is its much broader selection of investment choices and an access to a lot more products and services than say in a typical 401K where the employer might provide five or six or ten different investment choices from may be one or two company. Inside the IRA, you have almost an unlimited amount of choices and you have the opportunity to work with a professional. We at Merrill Lynch can help guide the overall financial plan and help tailor certain products to meet the needs of the individuals or family.

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