Question 1

What is a rollover?

Accepted Answer

is a distribution from one retirement plan or account and the transfer of the distributed assets to another retirement account or plan.

Question 2

When must a rollover be accomplished? Why?

Accepted Answer

Rollovers must be accomplished within 60 days to avoid to current tax liability.

Question 3

What is a permissible rollover?

Accepted Answer

A Rollover is generally permitted between any type of IRA, qualified plan, or 403(b) plan.

Question 4

Can you rollover to a Roth IRA?

Accepted Answer

Yes, within AGI limitations. But you'd have to pay taxes on the distribution before it's placed into the Roth account. Contributions to Roth IRAs are with after-tax dollars. A rollover to a Roth IRA is permitted (for investors within AGI limitations). However, income tax WOULD have to be paid on the distribution of assets before it was placed into the Roth account.

Question 5

Can you rollover to a 403(b) account?

Accepted Answer

Yes, allowable by law but employers managing 403(b) plans are not required to accept such rollovers, so this option isn't always available to employees in a 403(b) plan.

Question 6

What is a non-permissible rollover?

Accepted Answer

A rollover from a Roth IRA to a qualified plan is not permitted.

Question 7

Can you rollover from a Qualified Plan (e.g. 401k plan) to a Roth IRA?

Accepted Answer

Yes, this is permitted now. But prior to 2008, a direct rollover from a Qualified Plan (e.g. a 401k plan) to a Roth IRA was not permitted.

Question 8

What is the time limitation on rollovers?

Accepted Answer

Rollovers must generally be completed within 60 days of withdrawal of assets from an account in order to avoid tax liability.

Question 9

What happens if any portion of a withdrawal is not rolled over within 60 days?

Accepted Answer

Any portion of a withdrawal that is not rolled over within 60 days will be taxed as ordinary income and may be subject to a 10% penalty.

Question 10

What is recharacterization?

Accepted Answer

If an indvidiual has made a contribution to a Traditional or Roth IRA, and decides that it would be more beneficial to use the other type of IRA, the contributions may be “recharacterized” as having been originally made to the desired type of IRA.

Question 11

When do individuals have until to complete the recharacterization?

Accepted Answer

Individuals have until the due date of their tax return for the year in which the contribution was made to complete the recharacterization.

Question 12

According to IRS rules, if you make a tax-free rollover of a distribution from an IRA, can you make another rollover from the same IRA within a one-year period?

Accepted Answer

No. If you make a tax-free rollover of a distirbution from an IRA, you generally CANNOT make another rollover from the same IRA within a one-year period.

Question 13

Can you make a rollover from an IRA to which the distribution was rolled over (can you go back and forth)?

Accepted Answer

No. You also CANNOT make a rollover from an IRA to which the distribution was rolled over. You can only rollover once.

Ch 11(4) Retirement Plans & College Tuition Plans | Rollovers and Recharacterization Flashcards

Rollovers and Recharacterization.

Brainscape's Knowledge GenomeTM

Ch 11(4) Retirement Plans & College Tuition Plans | Rollovers and Recharacterization Flashcards

Rollovers and Recharacterization.

Brainscape's Knowledge Genome^TM