A rollover IRA refers to a particular type of individual retirement account available to all taxpayers in America. Opening this account allows them to deposit the outstanding funds in their previous employer-sponsored retirement investment schemes like the 401(K) plans. This ensures the funds they want to invest for their post-retirement life preserve their tax-deferred status. The money does not become taxable at higher rates or attract withdrawal penalties.
Arbor Financial Melbourne is a leading name in investment securities in the USA. It is an SEC Registered Investment Advisory Firm in the nation known for its experienced and qualified team of professionals. According to the experts, opening a rollover IRA enables taxpayers to transfer from their previous 401(K) plans to a traditional individual retirement account. In doing so, they can achieve the following two key objectives:
- Retain the tax-deferred status of their retirement funds and assets in the 401(K) plans, and
- Avoid becoming liable to pay taxes at higher rates and withdrawal penalties on the transfer.
Moreover, opening a rollover IRA account allows them to invest in a diverse range of lucrative financial assets. These include certificates of deposits (CDs), corporate bonds, company stocks, mutual funds, and exchange-traded funds (ETFs). This enables them to meet their post-retirement financial goals and maintain a low-risk tolerance.
How to open a rollover IRA account and transfer the 401(K) funds?
Taxpayers who want to open a rollover IRA account first need to decide what version to opt for. There are two main categories of rollover individual retirement accounts which they can choose from. These are:
- Traditional IRA
These rollover IRA accounts allow the taxpayers to claim tax deductions on the yearly monetary contributions. However, they become liable to pay taxes as soon as they start withdrawing money from accounts on their retirement.
- Roth IRA
Under the rollover Roth IRA accounts, the taxpayers cannot claim tax deductions on their yearly monetary contributions. Fortunately, the post-retirement withdrawals which the individuals make once they retire are tax-free.
Next, they should browse through the websites of reliable financial consultants and brokers who specialize in these accounts. They should choose one which suits their needs, charges reasonable fees, and completes the process on their behalf. Then, they should transfer the 401(K) funds by these experts’ instructions to avoid any tax complications. Finally, they should compare the range of investment options under the account and select a portfolio meeting their post-retirement financial goals.
According to the professionals of Arbor Financial Melbourne, taxpayers enjoy many advantages when opting to apply for rollover IRA accounts. The service providers generally charge lower fees for opening these accounts than 401(K) plans. Moreover, reports have a diverse range of investment options and facilities to manage the assets than the employer-sponsored schemes. However, before deciding, they should read the offer documents’ fine lines, compare expenses and consider the tax implications.