Retirement Income Blog

A rollover IRA is a retirement account that you can use to consolidate the funds you’ve set aside in various other retirement accounts. Bringing your funds together can give you access to a wider range of investment options and will make the management of your investments much easier. This way, if your retirement savings goals change, you can change the strategy for the management of your money quickly and easily. And make no mistake – your goals will change as your life changes.

A rollover IRA is also known as a target IRA by most financial professionals. What this means for you is that this is the IRA where your money is going to wind up – regardless of where it came from, it’s the target or destination of the IRA rollover. Be aware when you’re considering a rollover IRA that some types of IRAs can’t accept funds from other types of IRAs. Therefore, you’ll want to choose a rollover IRA that is of a type that can accept money from all of your old accounts (or, if not all, at least the majority of them).

If you haven’t already, this would be an ideal time to enlist the services of a financial professional. Many of the current IRA rollover rules can be very complex, and simple missteps in the IRA rollover process can lead to significant costs, in terms of unnecessary taxes, fees or penalties. This really isn’t an arena that you’ll want to walk into by yourself.

Once you’ve determined the type of rollover IRA to set up, the next thing to remember is that in almost every instance, you want to request an IRA direct rollover. As the name implies, this type of transfer occurs when money is moved directly from the administrator of one account to the administrator of the other. The money never comes into your hands. This is vital to protect the tax status of the money you’ve accumulated thus far. Once you take possession of your money, it can be classified as a withdrawal or a distribution. In that instant, you are subject to mandatory withholding – usually 20% of your account balance – as well as taxes and penalties.

To initiate an IRA direct rollover, contact the administrator of your target IRA and tell him or her to perform an IRA direct rollover; use those exact words. This will begin a legally defined process whereby the administrator of the target IRA will contact his or her counterpart at the old IRA and arrange for the transfer the money, typically using a check or a wire transfer. There will be some paperwork associated with this, but the administrator will be able to help with any questions you may have.

Following these simple rules, you’ll be able to use the rollover IRA process to both consolidate your funds and maximize your control over them. This way, as changes in your life necessitate changes in your retirement goals and strategies, you’ll have easier access to your retirement money to make those changes.

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This article is retirement help on how you can recover the $150,000 loss in your 401k in the next 6 months (for tactics to employ now, see my post at ).  This article is about understanding how and why that $150,000 evaporated and why you will not get it back in the next 6 months or likely the next 6 years.

The recent financial crisis is NOT a temporary drop in the market, your 401k and your IRA savings. It is a PERMANENT adjustment in the valuation of assets that became overvalued.  So don’t think of your 401k as down.  It’s now about the right value.  A year ago, your 401k and your house value was artificially inflated due to excessive credit.  Valuable retirement help is to tell you the truth–adjust your retirement plans downward.

Be realistic, how can an economy survive when

1. people can buy houses with 0% down and without the income to make the payments
2. stocks of companies involved in the housing balloon trade as if those houses are worth what the appraiser says

People now see that the emperor has no clothes.  The retirement help we can provide is to advise that you adjust your retirement plans downward and not think that the market will adjust itself for you.

The house that sold for $500,000 has a true value of $250,000. And all of the people involved in the housing market–the Realtors and the mortgage brokers are unemployed.  The lenders who made these ridiculous loans now realize that the loan, carried on their books at $500,000 must now be written down to $250,000, wiping out the lender’s capital.  The person who resided in the home gets foreclosed on and he might also lose his job because the housing calamity ripples through the entire economy (i.e lenders have stopped making loans to individuals or business).  People who had been taking vacations, buying cars, buying second homes and enjoying the good life by borrowing against their home equity can no longer do so as they have no equity.

So the value of real estate and assets in generally, reflected in stock prices, has now returned to a sustainable valuation and not some value created by a mass fantasy.  We all engaged in a fantasy that life could be so good without paying for it.  Reality does not work that way.  Now that you’ve swallowed the truth, let’s get to some retirement help.

Most Americans need to adjust their standard of living downward.  If you planned to retire at age 62, that will now be 66.  That’s four years less of doing as you please and instead, reporting to work.  The 3,000 square foot house you had planned as your retirement residence, better make that an 1800 square foot condo.  Your plans to remain in high cost Southern California, better think about a comfortable community in low cost Texas.  Unfortunately, all of the visions of retirement that you thought could be must now be scaled down to reality.  The best retirement help and advice we can offer is to make your adjusted and realistic retirement plans now. The good news is that you won’t go bankrupt and you won;t miss any meals.  But the fairy-tale visions we all held about a comfy retirement must now be exchanged for the truth.

Its not so bad, it’s just reality.

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