IRA Mistakes to Avoid

Mistakes to Avoid

IRA Rollovers

IRA Rollovers

 

 

 

 

 

 

 

There have been recent changes to IRA rollover rules, therefore I have listed 3 IRA Rollover mistakes to avoid below.

  1. Missing the 60-day rollover deadline – If you move assets in an IRA account and take direct control of the proceeds you must rollover the proceeds back into an IRA with sixty days otherwise the distribution will be considered a withdrawal subject to income taxes and 10 % penalty if you are under the age of 59 ½.
    If you are moving a 401k plan account to an IRA Rollover, it is best to do a direct employer to IRA account rollover which means you never receive the proceeds from that rollover. If you should decide to make use of the 60-day rule beware that you will have to pay additional taxes upfront which will be refunded though once you file your tax return for the year in which you make the rollover.
  2. Violating the same-property rollover rule – property distributed from the original account must be the same property contributed to the newer receiving IRA account; this includes Roth accounts as well. Example – you cannot use the proceeds to purchase real estate and then place the real estate property into the IRA account.
    The exception to this rule deals with 401k rollovers – in this case you may sell the property (stocks, mutual funds, etc.) distributed from the plan and roll over the cash proceeds from the sale.
  3. Violation of the once-per-year rollover rule – this is a newer and more recent change to the rollover rules. In the past you were able to move numerous IRA account per year, that has changed now to only one per year.
    If in doubt do seek professional help when considering any possible tax event like IRA rollovers. Hopefully your professional will be up to date on all new tax changes that might affect your tax liabilities.

 

Financial quote of the week – “Money is better than poverty, if only for financial reasons.”

Woody Allen

Daniel F. Iuculano, AAMS CMFC

Accredited Asset Management Specialist

Chartered Mutual Fund Counselor

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