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IRA’s/ROTH’s/SEP’s & 401K Rollover Strategies

With hassle-free rollovers, self-directed investing and Low Management fees, a Traditional IRA, Roth IRA, Rollover or SEP IRA is a simple way to build a solid financial base for your retirement dreams. Understanding the differences between each IRA type is important when choosing one for your investment needs. Each IRA has its own unique advantages and guidelines regarding withdrawals, contributions, taxes and rollovers.

Because Traditional and Roth IRAs are the most common account types, here is more in-depth look at their key differences.

One of the biggest differences between Traditional IRAs and Roth IRAs is in the tax benefits. With a Traditional IRA, your contributions may be tax-deductible. This means your overall tax bill can be decreased with your current income. On the other hand, when money from that Traditional IRA is withdrawn, that money is subject to normal taxation. A Roth IRA features no up-front tax deduction for your contribution. Roth IRA contributions are made with “after-tax” dollars, which means that your Roth IRA contributions have already been taxed with your income. Therefore, you can make a withdrawal of your contribution dollars at any time, generally tax-free.

Overall, a Traditional IRA puts more money in your pocket from your paycheck, while a Roth IRA provides more control over withdrawals from your IRA. Both are intelligent IRA choices, and we encourage you to take an in-depth look at their differences, ensuring you select the IRA that best matches your investment planning strategy.

A plan participant leaving an employer typically has four options (and may engage in a combination of these options), each choice offering advantages and disadvantages.

  • Leave the money in his/her former employer’s plan, if permitted;
  • Roll over the assets to his/her new employer’s plan, if one is available and rollovers are permitted;
  • Roll over to an IRA; or
  • Cash out the account value.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

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