Tips For Rollover Retirement Fund To Roth Ira
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A Roth IRA is a retirement account where contributions are made after tax deduction, meaning you will not be able to claim any kind of tax deduction for your contributions; the plus side is that the money that receivable at retirement is tax free too. A number of people take their money from other retirement accounts and convert them to Roth IRA, precisely to avail of this benefit.
Even better news, with effect from 2010, the IRS is lifting its restrictions on Roth IRA rollovers, for those with an adjusted gross income that is less than a particular limit. You too can get your Roth IRA rollover set up through the financial institution where you have your retirement account. For this you will have to furnish the financial institution with your account details and inform them about the exact amount that you would like them to earmark for your Roth IRA rollover. The check that you will receive will be eighty percent of the total amount that you have used in the Roth IRA rollover. This is in accordance with IRS rules, which say that exactly 20 percent of the amount must be kept back for tax purposes.
This means that when you are rolling over $15,000, the check you will receive will be for $12,000, and the balance $3,000 will be withheld towards taxes. Next, you must redeposit the entire rollover amount into your Roth IRA account within sixty days from the time you request the rollover. There is no way of dodging this part because this 60-day rule is a strict one. Rolling money from one Roth IRA to another Roth account will be tax free.
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