Rollover Timing - Wealth Rollover

When to Execute Your Rollover

Timing your retirement account rollover correctly can save money, reduce taxes, and avoid complications. Several factors determine the optimal time to move your funds.

After Leaving Employment

Most rollovers happen after leaving a job. Key timing considerations:

Wait for final contributions: Ensure your last paycheck contributions and any employer match have posted before initiating the rollover.
Check vesting schedules: If employer contributions aren’t fully vested, you may forfeit unvested amounts by leaving too early.
Consider your gap period: If you’re between jobs, a low-income year might be ideal for a Roth conversion.

Calendar Year Tax Planning

Strategic timing within the calendar year matters:

Early in the year: If converting to Roth, early conversions allow more time for tax-free growth that year.
End of year: By December, you’ll have clearer visibility into your total annual income for tax planning.
Avoid crossing tax brackets: Time conversions to stay within your current bracket.

Market Timing Considerations

While you shouldn’t try to time markets, some rollover timing makes sense:

For Roth conversions: Converting when account values are temporarily lower means paying taxes on a smaller amount.
During transfers: Funds may be out of the market for several days during the rollover process. Consider timing around market volatility.
Required Minimum Distributions: If you’re 73+, take your RMD before rolling over. RMDs cannot be rolled over.

Critical Deadlines

60-day rule: Indirect rollovers must be completed within 60 calendar days.
One-rollover-per-year rule: You can only do one indirect (60-day) IRA-to-IRA rollover per 12-month period. This doesn’t apply to direct rollovers or 401(k) rollovers.
Tax filing deadline: Roth conversion contributions can be recharacterized until your tax filing deadline (plus extensions).

Avoid Rush Decisions

There’s rarely urgency to complete a rollover immediately after leaving a job. Your funds remain protected in your former employer’s plan. Take time to research options, compare fees, and plan the tax implications properly.