Rollovers and IRAs

If you have money sitting in a tax-qualified retirement plan sponsored by a former employer, you  may want to take advantage of rolling your  money in that plan to a Schwab IRA with Wellington. If you already have an IRA (one you contributed to or one that holds a rollover from a former employer) you may rollover the assets in that IRA to a Schwab IRA with Wellington. By rolling over your money to a Schwab IRA with Wellington, you continue to defer taxes on the benefits and earnings until you begin to take distributions from the IRA. In addition you have the added benefit of having that money professionally managed in one of Wellington’s Professionally Managed Model Investment Portfolios.

A payment from an employer’s plan or IRA can be taken in two ways.

Option 1: You can have the payment either paid in a “direct rollover” or paid to you. If you choose a direct rollover:

  • Your payment will not be taxed in the current year and no income tax will be withheld.
  • Your payment will be made directly to your IRA.
  • Your payment will be taxed later when you take it out of the IRA

Option 2:  If you choose to have your plan benefits or IRA paid to you:

  • You will receive only 80% of the payment, because your former employer is required to withhold 20% of the payment and send it to the IRS as income tax withholding to be credited against your taxes. (This rule does not apply to distributions from an existing IRA.)
  • Your payment will be taxed in the current year unless you roll it over. If you receive the payment before age 591/2, you also may have to pay an additional 10% tax.
  • You can roll over the payment by paying it to your IRA within 60 days of receiving the payment. The amount rolled over will not be taxed until you take it out of the IRA.
  • If you want to roll over 100% of an employer’s payment to an IRA, you must find other money to replace the 20% that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that was withheld and not rolled over.

Here are some of the features of Schwab IRA with Wellington:

  • Dedicated client service team
  • Over 3,000 no-load mutual funds, ETFs, stocks, bonds and CDs available
  • Charles Schwab & Co., Inc. as the custodian of plan assets
  • Self-Directed and Managed Model Investment Portfolios
  • And much more!

Are you ready to get started?

Let us send you a proposal with all of the services we offer and show you the value provided with our 401(k) plan.