Which types of distributions can I roll over?

IRAs

You can roll over all or part of any distribution from your IRA except:

  • A required minimum distribution or
  • A distribution of excess contributions and related earnings.

Retirement Plans

You can roll over all or part of any distribution of your retirement plan account except:

  • Required minimum distributions,
  • Loans treated as a distribution,
  • Hardship distributions,
  • Distributions of excess contributions and related earnings,
  • A distribution that is one of a series of substantially equal payments,
  • Withdrawals electing out of automatic contribution arrangements,
  • Distributions to pay for accident, health or life insurance,
  • Dividends on employer securities or
  • S corporation allocations treated as deemed distributions.

Distributions that can be rolled over are called “eligible rollover distributions.” Of course, to get a distribution from a retirement plan, you have to meet the plan’s conditions for a distribution, such as termination of employment.

Will taxes be withheld from my distribution?

You have to meet the plan’s conditions for a distribution, such as termination of employment.

IRAs: An IRA distribution paid to you is subject to 10 percent withholding unless you elect out of withholding or choose to have a different amount withheld. You can avoid withholding taxes if you choose to do a trustee-to-trustee transfer to another IRA.

Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20 percent, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.

Source: IRS, March, 2018

For Educational Purposes Only.

Information about IRA rollovers is intended to be educational only. It is not tailored to the investment needs of any specific investor.  This information should not be considered tax or legal advice.

IRA rollovers are subject to complex tax laws and regulations which are subject to change and which can materially affect investment results. Westwood cannot guarantee that this information is accurate, complete, or timely. Westwood makes no warranties regarding this information or results obtained by using it. Westwood disclaims any liability arising out of the use of, or any tax position taken in reliance on, this information. Be sure to consider all your available options and the applicable fees and features of each before moving your retirement assets.

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