A Rollover Individual Retirement Account (IRA) has the same tax benefits as a Traditional IRA and there is no limit to the amount you can rollover from a qualified plan.
Best if you
- Would like to have a broader choice of investments and keep your savings tax-deferred
- Want to rollover assets from multiple former employer plans into one easy-to-manage account
- Are interested in flexible distribution options
- Tax advantages are protected
- No limit to the amount of tax-deferred money you can transfer
- Generally, lower investment costs
For your information
It may be helpful to consider some of the contribution and distribution requirements when deciding if the Rollover IRA is right for you.
When choosing a retirement plan, consider some of these contribution requirements for a Rollover IRA.
- Eligible individuals may rollover savings from former workplace plans, including 401(k), 403(b) or 457(b).
- For 2017, your contributions to all of your Traditional and Roth IRAs cannot be more than $5,500 ($6,500 if you're age 50 or older), or your taxable compensation for the year, whichever is less.
Rollover IRA withdrawal rules and penalty details vary depending on your age.
- Your deductible contributions and earnings will be taxed as ordinary income.
- For distributions, participants must be over age 59½, disabled, deceased or a first-time home buyer. There is a 10% penalty for withdrawals before age 59½.
- Minimum required distributions start at age 70½.
- Under certain circumstances, you may be able to avoid the penalty on early withdrawals.
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What mistakes am I making with my money?
Make sure you're avoiding these pitfalls to create better financial habits.
Everybody wants to have extra cash at the end of the month. Even better if there's enough to add to your savings or to put toward retirement. But in reality, that doesn't always happen.
Here are six common money mistakes you can avoid to create better money habits.
Mistake #1: Spending your whole paycheck
Sometimes it's fun to be a big spender, but you can't do it all the time. Instead, set up automatic withdrawals to a savings account the same day your paycheck goes in. Then, you won't even have to think about saving.
Mistake #2: Buying coffee every morning and eating out too often.
We all have our favorite places to eat, but if you make coffee at home and eat in more often than not, you can easily save a few hundred dollars a month just by living within your means.
Mistake #3: Treating your credit card like another source of income.
Sure, it seems like charging one tank of gas isn't a big deal. But small things add up quickly when you don't pay off your balance every month.
Mistake #4: Having zero financial goals.
Yes, it's important to cultivate friendships, have fun, and to travel. But, think beyond this year. Set some long-term goals and stick to them so you can enjoy what's ahead.
Mistake #5: Failing to meet your 401(k) employer match.
If your boss hands you an extra three percent of your salary, you say "thanks" and take it. That's exactly what happens when your company matches a percentage of what you save toward retirement. So take the maximum your company gives you. Don't leave free money on the table.
Mistake #6: Neglecting to plan for retirement.
Even if your company doesn't have a retirement plan in place, start saving today. The compound interest you earn from starting now can be astronomical compared with what you'll have if you delay.
So avoid these mistakes. Create good money habits now and you'll increase your quality of life today and tomorrow.
How often should I do a financial check-up?
Conducting a mid-year check-up on key financial areas—budget, credit score, retirement savings, life insurance—will allow you to adjust if needed to keep your annual financial goals on track. Here are some important aspects of a financial check-up.
Conducting a financial check-up
Hold your own budget summit
Has your budget changed? Evaluate your spending habits and reset goals if needed. If you got a raise or a new job, maybe you can afford to save more each month. If you don't already have a budget, start one—a mid-year financial check-up still gives you six months to make a difference.
Optimize your tax breaks
Are you taking advantage of opportunities to lower your taxable income by paying into a tax-advantaged retirement account? Are you maximizing contributions to your retirement plan? For example, say you were able to contribute $18,000 in pretax dollars to your 401(k) or 403(b) in 2016. For those aged 50 and older, it's possible to make a catch-up contribution of as much as $6,000, which increases your 2016 total to $24,000.
Get reacquainted with your investments
While it can be good to leave your investments alone, it's also a good idea to review your portfolio once a year. Consider your financial goals and assess risk level compared with the market's year-to-date performance and make any adjustments to keep you on pace with your financial goals.
Revisit insurance coverage
Are the liability limits you have still high enough to protect your assets? If you've done any home improvements or upgrades, consider whether your policy is high enough to replace your home and possessions if needed.
Evaluate your debt
Look at your credit card balances and other loans. Is your balance creeping up? Maybe you need to make some budget adjustments or consider refinancing to lower interest rates.
Estate plans and wills only need to be reviewed every five years or so, but consider making this part of your mid-year financial check-up if a life change has happened, such as marriage, divorce, birth or death. This would also be a good time to look at life insurance and retirement account beneficiary designations to ensure they match the rest of your estate plan.
Doing a mid-year financial check-up might seem like a lot of work, but it will help protect you, your loved ones and everything you've worked hard for.