FFM - Tax Qualified Rollovers & Transfer Options

“Rolling over or transferring your tax qualified assets is great option for those looking to delay the payment of income taxes. However, since 1993 rollovers can be subject to a 20% mandatory withholding tax if you do not transfer your assets directly from one institution to another, so be careful.”

Mark R. Fielder
President, FFM, LTD.

The Rollover Advantage

There can be distinct advantages in rolling over or transferring a tax-qualified asset. But first, let's make the proper distinction between Rollover, Transfers and Direct Rollovers.

If the investor receives a distribution from a tax qualified plans such as a 403(b), IRA or SEP, the investor may rollover to another qualified plan (providing the new plan accepts qualified plan monies). For example, a 403(b) can be rolled to another 403(b) or to an IRA, while a SEP can be rolled to another SEP or IRA.

The Transfer, like the Rollover, does not trigger adverse tax consequences when done correctly. A 'transfer" is characterized as an institution to institution transaction with the classification of assets going to another identical classification. For example, these tax deferred transfers would be for and IRA to IRA, SEP to SEP and 403(b) to 403(b) transfers.

Direct Rollover

This tax-deferred transaction is typically made from a 403(b) or 401(K) or other tax-qualified or company pension plan directly to a Self-Directed IRA or SEP plan, but not vise-versa.

Action To Take

For many investors, it may make good sense to rollover, transfer or directly rollover current plans assets to avoid taxation and continue allowing the assets to compound without current taxation.

Under most circumstances, a rollover is the result of leaving your current place of employment or a desire to "upgrade" or better your selection of investment options.

If you would like to explore various Rollover or Transfer Options, including funding options, please click HERE.

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Securities are offered through Girard Securities, Inc. member FINRA, SIPC.
Mark R. Fielder, Registered Principal. CA. Insurance Lic. # 0690576.