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March 6, 2009

Assuming I am eligible to make withdrawals from my qualified plan or 403(b) account, can I rollover the withdrawn amounts to my IRA?

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Assuming I am eligible to make withdrawals from my qualified plan or 403(b) account, can I rollover the withdrawn amounts to my IRA?

Question Assuming I am eligible to make withdrawals from my http://retirementdictionary.com/definitions/qualifiedretirementplan qualified plan or http://retirementdictionary.com/definitions/403bplan 403(b) account, can I rollover the withdrawn amounts to my http://retirementdictionary.com/definitions/ira IRA?

Answer

It depends. First, the receiving IRA must be a http://retirementdictionary.com/definitions/traditionalira Traditional (including a http://retirementdictionary.com/definitions/simplifiedemployeepensionsepira SEP) IRA. These amounts cannot be rolled over to a http://retirementdictionary.com/definitions/simpleira SIMPLE IRA until the SIMPLE IRA has been established for two years. And, the amount must be http://retirementdictionary.com/definitions/eligiblerolloverdistributionerd rollover eligible. Rollover eligible amounts usually include all of your account balance, except for the following amounts.

Part of a series of substantially equal payments made

• over a period of 10 years or longer
• over the participant’s life or http://retirementdictionary.com/definitions/lifeexpectancy life expectancy, or over the joint lives or joint life expectancies of the http://retirementdictionary.com/definitions/participan participant and the participant’s http://retirementdictionary.com/definitions/designatedbeneficiary designated beneficiary
• http://retirementdictionary.com/definitions/requiredminimumdistributionrmd Required minimum distribution amounts
• Any http://retirementdictionary.com/definitions/distribution distribution which is made upon hardship of the participant, or in the case of a http://retirementdictionary.com/definitions/457plan 457(b) plan, any http://retirementdictionary.com/definitions/distribution distribution on account of an unforeseeable emergency
• Death distributions made to nonspouse beneficiaries , unless the plan allows such rollovers
• Distributions due to a http://retirementdictionary.com/definitions/qualifieddomesticrelationsorder qualified domestic relations order (QDRO) paid to a nonspouse alternate-payee
• Return of an http://retirementdictionary.com/definitions/excesscontribution excess contribution, http://retirementdictionary.com/definitions/excessdeferral excess deferral, or excess http://retirementdictionary.com/definitions/annualaddition annual addition, together with allocable income
• The cost of life insurance coverage
• Deemed distributions upon the default of a participant loan
• Dividends paid on employer securities in an http://retirementdictionary.com/definitions/ESOP employee stock ownership plan (ESOP)

You can rollover the amount withheld for taxes from your other source of funds, if you want to do so; and when you file your tax return, the amount (that was withheld) would be treated as a credit towards any taxes you may owe, or increase your tax refund.

Note: Effective January 1, 2008, participants who are eligible to make withdrawal from a qualified plan, 403(b) plan, 403(a) plan or governmental 457(b) plan may rollover the withdrawn amounts to a http://retirementdictionary.com/definitions/rothira Roth IRA, providing the amount is rollover eligible. The individual must meet the Roth IRA conversion eligibility requirements, which are:

• The individual’s (couple’s, if married) http://retirementdictionary.com/definitions/modifiedadjustedgrossincomemagi MAGI cannot exceed $100,000
• The individual’s tax filing status cannot be married-filing-separately.

These two restrictions are repealed effective January 1, 2010.

See IRS Publication 575 for more information

Question answered by http://deniseappleby.com/ Denise Appleby

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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