IRA Rollover

What is an IRA Rollover? The Definition of an IRA Rollover

Generally, an IRA rollover is a tax free IRA distribution of cash or other IRA assets from one retirement plan or IRA that are contributed to another retirement plan or IRA. A person can have one IRA or multiple IRAs. Below are some important IRA rollover rules and IRA rollover explained. See also IRA Rollover Quick Facts.

What is an IRA rollover contribution?

The contribution to the second retirement plan or IRA is called a "IRA rollover contribution."

The IRA custodian reports the total value of IRA rollover contributions received on Form 5498. An IRA rollover distribution from either a qualified retirement plan or IRA is reported on Form 1099-R.

Completing a qualified IRA rollover will defer income taxes on the amount distributed until it is later withdrawn from the IRA. For information on distributions, see IRA rollover distributions.

How does a trustee to trustee transfer differ from an IRA rollover?

A movement or transfer of retirement plan assets in a traditional IRA from one trustee directly to another trustee, either at the owner's request or at the trustee's request, is not an IRA rollover.

Because there is no IRA rollover distribution paid to the IRA rollover owner, the IRA transfer is not a taxable event. Form 1099-R is not issued.

Unlike the once-per-year limit on IRA rollovers from the same IRA, there is no limit on the number of trustee to trustee transfers that can be made in any year.

What kinds of IRA rollovers can be made to a traditional IRA?

There are two kinds of IRA rollover contributions to a traditional IRA. An IRA rollover to Roth IRA is also very popular.

• Amounts received from one traditional IRA, SEP IRA, SARSEP or SIMPLE (after 2 years from the first SIMPLE contribution) into the same or another traditional IRA.

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• Amounts received from an employer 's qualified retirement plan, including 403b (see Rollover of 403b to Traditional IRA), 401k and governmental 457 plans, for its employees into a traditional IRA.