A rollover Individual Retirement Account (IRA) is an account that allows for the transfer of assets from an old employer-sponsored retirement account to a traditional IRA. The purpose of a rollover IRA is to maintain the tax-deferred status of those assets. Rollover IRAs are commonly used to hold 401(k), 403(b), or profit-sharing plan assets that are transferred from a former employer’s sponsored retirement account or qualified plan.

Generally, there are no tax implications if you complete a direct rollover and the assets go directly from your employer-sponsored plan into a Rollover or Traditional IRA via a trustee-to-trustee transfer.

However, if you choose to convert some or all of your savings in your employer-sponsored retirement plan directly to a Roth IRA, the conversion would be subject to ordinary income tax.

At AlphaPlus Wealth Management, we specialize in tax optimization plan which reduces impact of ordinary income tax while conversion to Roth IRA.

If you want help with your 401(k) plan or Rollover IRA account, we are here to advise you on allocations and investment choices and then review your account each quarter.