Rollover Basics

• Contact your plan's trustee as soon as you decide to roll over your IRA. You can only make one rollover of any part of your IRA each year, so it pays to get it done while you're thinking of it. From a traditional IRA, you can roll over your assets to one of several tax-deferred retirement accounts, including, generally, a Roth IRA. Once you've withdrawn your money, you have 60 days to move it into an eligible account. To qualify for a rollover, move the same assets into your new IRA--you can't use the money to buy stocks and then put those stocks into your new IRA. If you withdraw money directly, your account trustee is generally required to keep 20 percent of the distribution. This counts as part of the distribution, so you'll need to add that 20 percent to the amount you actually receive before you deposit the funds in a new IRA. To avoid this fee (and paying taxes on income you don't have access to), choose direct rollover, which moves your assets between accounts without the money coming directly to you.
  
  

Rollover Due to Divorce

• Contact your plan's trustee when the divorce settlement is final. You can instruct the trustee to either change the name on the account or transfer the IRA's assets to your ex-spouse's IRA. Both of these procedures are simple, and count as rollovers for tax purposes. If the transfer changes the amount of nondeductible contributions in either of your IRAs, fill out IRS Form 8086.
  
  

Rollover Accounts

• You can roll over into another IRA, your employer's qualified pension, profit-sharing or stock bonus program or an annuity plan. The best choice in this case will depend on your specific life and work situation. A stock bonus program is a good option for employees of stable companies, particularly if the market is down at the time the options are issued. Profit sharing is a better option when the market is up. An annuity is a good option for the self-employed or those who need a steady source of income. Your options may, of course, be dictated simply by what your company offers. Talk with the benefits adviser at your company or with an independent investment adviser to select the best plan for your situation.