This article examines a handful of important tax questions about IRAs, rollovers, and retirement plans. It explains the definition of an “eligible retirement plan” for the purposes of the rollover rules. The article also explains what new rules will apply permitting a taxpayer to rollover pre-tax and after-tax contributions in a qualified plan into separate accounts in a single distribution. It tells the reader why a participant receiving an eligible rollover distribution has the option of making a direct rollover to another qualified plan. “Distributions from qualified retirement plans, tax sheltered annuities, and eligible Section 457 governmental plans are subject to a mandatory income tax withholding rate of 20 percent unless the transfer is handled by means of a direct rollover.” An individual who is not participating in a qualified plan may rollover by reason of a divorce or separation agreement if it is a qualified domestic relations order (QDRO) and certain requirements are met.
See 5 Essential Tax Questions About IRAs, Rollovers and Retirement Plans, Think Advisor, March 14, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
