When a person retires from employment and moves a 401K account balance into an IRA account they are engaging in what is called a “rollover.” This article summary describes some of the different types of account transfers that the term “rollover” applies to. A rollover by an account owner involves the direct account-to-account transfer by the custodian. In a spousal rollover a surviving spouse can take maximum advantage of income tax deferral rules by moving untaxed account proceeds into his or her own IRA retirement account. The account balance can also be transferred to a designated beneficiary in an inherited account rollover. Finally, Section 402(c)(11) was recently added to The Pension Protection Act to make it easier for a non-spouse beneficiary to rollover a 401K or other retirement plan into an IRA account.
See Thomas W. Abendroth, Retirement Account Rollovers, The National Law Review, August 15, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
