IRA Rollover Options

IRA Rollover Options Explained

Individual Retirement Accounts offer flexibility that employer plans don’t. Understanding your IRA rollover options helps you consolidate accounts, optimize investments, and plan for retirement more effectively.

What Can Be Rolled Into an IRA?

Most retirement accounts can be rolled into an IRA:

• 401(k), 403(b), 457(b) plans: Both pre-tax and Roth versions (to matching IRA types)
• Traditional pensions: Lump-sum distributions can roll into traditional IRAs
• Thrift Savings Plan (TSP): Federal employees can roll TSP to IRAs
• SIMPLE IRAs: After two years of participation, can roll to traditional IRA
• SEP IRAs: Can consolidate into traditional IRA anytime

Traditional IRA Rollover Options

Traditional IRAs accept pre-tax retirement funds:

• From employer plans: Pre-tax 401(k), 403(b), and 457(b) balances
• From other IRAs: Traditional, SEP, and SIMPLE IRA funds (after waiting period for SIMPLE)
• To employer plans: Traditional IRA funds can roll into a 401(k) if the plan accepts rollovers—useful for backdoor Roth strategies

Roth IRA Rollover Options

Roth IRAs accept after-tax retirement funds:

• From Roth 401(k)/403(b): Direct transfer preserves tax-free status
• From other Roth IRAs: Unlimited direct transfers between Roth IRAs
• Roth conversions: Pre-tax funds can be converted to Roth (triggers taxes)

Choosing an IRA Custodian

Key factors when selecting where to open your rollover IRA:

• Fees: Compare account fees, trading commissions, and fund expense ratios
• Investment options: Ensure access to the funds and securities you want
• Tools and research: Quality platforms offer planning tools, research, and education
• Customer service: Responsive support matters when you have questions
• Account minimums: Some custodians require minimum balances for certain features

Consolidation Benefits

Rolling multiple accounts into one IRA simplifies your financial life:

• Easier tracking and management
• Simpler required minimum distribution calculations
• Potentially lower overall fees
• Easier beneficiary management
• Clearer picture of your total retirement savings