In the world of retirement plans, there are many types of financial investments available for all classes of workers. Most people are quite satisfied with the 401k plan which comes customarily with their employment. People who switch employment before they can retire may wish to make a rollover from their 401k account to a Roth IRA. Because of the complexities involved in making the rollover, there are actually quite a number of financial institutions that offer to handle the legal red tape involved with rolling over your assets from the 401k to your new Roth IRA.
In any case, there are generally two ways by which you can commence a Roth individual retirement account according to existing laws. The first way is to make a self-managed Roth IRA by simply declaring some of your assets or investments under the Roth IRA system. This is rather risky because if you do not know what you are doing, your assets could far outweigh your liabilities quite fast. This is why it is recommended that people who go for self-managed Roth IRAs only do so if they are quite certain that they know the risks they are taking. In order to have some form of assurance, you should get a financial consultant or adviser to manage your account in case you are really dead-set on taking out a self-managed Roth IRA.
All Roth IRA account holders, however, should be aware of the Roth IRA Withdrawal Penalty which is set by law at 10%. The individual retirement account may also be liable for taxes which are separate from the 10% penalty if early, unqualified withdrawals are made. In order to make qualified withdrawals under the Roth IRA system, it is important to comply with the 5-year rule as well as the age requirement of 59 and a half years of age.
Related articles
- Different Roth IRA Distribution Rules (2009taxes.org)
- The Best IRA CD Rates for Your Roth IRA Account (2008taxes.org)
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