A Rollover IRA is an account which stores money received from a retirement plan. Funds that qualify for IRA Rollover can come from 2 sources:
1. Employer's Retirement Plan
- Effective January 1, 1993 eligible roll-over distributions not paid directly from a Qualified Retirement Plan (QRP) to an IRA or other eligible plan are subject to 20% Federal Income Tax withholding.
- To avoid the 20% withholding you must instruct your plan administrator to make a direct rollover to an IRA or other eligible plan.
- Before you receive your distribution, open an IRA account at QNB. Then, when the direct rollover is deposited to your account, all the necessary paperwork will be completed.
In order to avoid losing any favorable tax treatment on a Rollover IRA originating from a qualified retirement plan, no yearly contributions should be made.
2. IRA Funds At Another Institution
- Withdraw from an IRA at another institution with a check made payable to you. Redeposit it into a Rollover IRA within 60 days. The IRS allows you to make this type of rollover from an IRA only once every 365 days.
QNB strives to be knowledgeable of changing tax laws. However, we are not tax advisors. Therefore, we encourage you to consult your tax advisor to discuss specific tax benefits for your situation.
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