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You Can Move One Tax-Deferred Account To Another Without Tax Consequences

Wednesday, July 3, 2013 - 8:59 PM
From Scott Burns:

     "...when you do a rollover from a 401(k) account to an IRA
      rollover account there are NO tax consequences because you
      have moved from one tax-deferred plan to another
      tax-deferred plan.

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2
cumuluscumulus326 posts since
Jan 16, 2010
Rep Points: 1,545
1. Thursday, July 4, 2013 - 6:58 AM
Watch out on how it is done. 

Per my understanding, you have two time limits.  60 day rule to move it if it is considered a DISTRIBUTION or ROLLOVER.  When you move money between IRA account holders, it can be done as a DISTRIBUTION or as a DIRECT TRANSFER.  But once you touch the account as a Distribution, both the original account and the accepting account cannot be touched again for distributions for 1 year (no limits on Direct Transfers, per my understanding).

Hopefully someone will post if I have this wrong.
2
Anon456Anon45630 posts since
Oct 30, 2011
Rep Points: 76
2. Thursday, July 4, 2013 - 9:00 AM
Re:  Anon456 1. Thursday, July 4, 2013 - 6:58 AM

Your understanding is correct on an IRA-IRA transfer (not sure on 401(k) to IRA as that was a long time ago for me).  On a rollover it is especially important to keep a close eye on the calendar and make sure all the funds are back in an IRA account within the 60-day window. 

Note too that you will need to report the distribution on your income taxes (even if it is not subject to taxes), and read carefully the instructions for form 1040 line 15a/15b.   If you do not do it correctly, the IRS will come calling for the taxes you owe  on that unreported income.
5
pearlbrownpearlbrown1,430 posts since
Nov 2, 2010
Rep Points: 6,246
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