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IRAs (Individual Retirement Accounts)

Rollovers to Your IRA

If you leave a company and you are vested in a qualified employer retirement plan, such as a 401(k) plan, you generally have several distribution options on how to take this money. Before you take a distribution, look at all your options and make an informed decision. You may have the following options available:

  • Leave the money in the former employer's qualified plan.
  • Directly roll over your qualified plan money into a new employer's qualified plan, assuming the new plan will allow you to do so right away.
  • Directly roll over your distribution into a conduit IRA until a new employer's plan will accept the money (necessary for certain plan participants to preserve capital gain and averaging treatment).
  • Directly roll over your distribution into a traditional IRA.

SUGGESTION: If you take your retirement money from your former employer's plan, and you do not have access to a qualified plan in your new job, it is a good idea to roll over your plan funds into a traditional IRA. This way you retain the deferral of taxes.

IMPORTANT NOTE: One disadvantage of rolling over qualified plan funds to a traditional IRA is that you lose the benefit of a special tax provision called "forward averaging." However, by rolling over the distribution to a conduit IRA in which qualified plan assets have been segregated, and then back into another qualified plan, you can preserve forward-averaging treatment. This special tax treatment is available to plan participants born before 1936.

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*Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. BancorpSouth Wealth Management is a trade name of BancorpSouth Bank, a division of Cadence Bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Eaton Federal Financial Services is a trade name of the bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.

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