Employee Benefits
Rollovers
Do you still have a 401(k) or retirement account at an old employer? Wondering what can be done with those accounts? Consider rolling those old accounts into a Wells Fargo Advisors Rollover IRA.
If you withdraw funds before reaching age 59½, you will usually have to pay ordinary income tax, and you may also be subject to a federal 10% penalty, on the taxable portion of the amount withdrawn if withdrawals are made before age 59½.
For most distributions from qualified retirement plans, the administrator of the plan is required to withhold 20% of the taxable amount to cover the federal income tax that will be due. The only exception to the withholding requirement is a direct rollover. Having your retirement plan administrator distribute the rollover-eligible assets from your plan directly to your Rollover IRA avoids the 20% withholding requirement and allows continued tax-deferred compounding of your retirement funds.
Whatever your age, the Rollover IRA is available to you. But if your rollover occurs after age 70½, you may not roll over your Required Minimum Distribution; it must first be distributed to you. Rollover IRAs share many of the rules that apply to Traditional IRAs, including:
- If you withdraw funds before reaching age 59½, you will usually have to pay ordinary income tax, and you may also be subject to a federal 10% penalty, on the taxable portion of the amount withdrawn if withdrawals are made before age 59½.
- Beginning on April 1 of the year after you reach age 70½, you must take annual Required Minimum Distributions.
- If you are the beneficiary of your spouse's qualified retirement plan or IRA, you have the right to deposit the taxable amount of those proceeds into a Rollover IRA in your own name. This will continue the tax deferral, and avoid the payment of income taxes. After the rollover, the IRA withdrawal rules apply based on your age.
Click on the link to download your complimentary copy of our brochure “ Your Retirement Plan Distribution .”
Call 800-521-9463 for more information on Rollover IRAs or retirement plan distributions.
Wells Fargo Advisors does not provide tax or legal advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.