When rolling over a SEP-IRA, there are two options: indirect and direct. Research and consult a tax advisor before making a decision. Indirect transfers may have fees, while direct transfers are faster and easier.
When rolling over a SEP-IRA, the account holder has two different options for moving the account from a SEP-IRA to another type of investment retirement account or from another type of retirement account to a SEP-IRA account. One option is an indirect rollover. The other option is a direct rollover. The path that the account holder should follow depends on the personal situation, but there are some suggestions that the account holder should use as guidelines.
First, the account holder should conduct some research. The search should include the type of retirement investment account that fits their personal situation and helps them achieve their goals. This is true regardless of whether the account holder is rolling over a SEP-IRA into a different type of retirement account or into a SEP-IRA from another type of retirement investment account.
It is also advisable to consult a tax advisor before making any SEP-IRA rollover decisions. A tax advisor provides the account holder with information about the best types of retirement account options for the individual’s personal tax situation. This can minimize the amount of fees the account holder pays when it comes time to start making withdrawals from the account. Tax advice can also maximize contribution amounts while minimizing tax payments.
An indirect transfer allows the account holder to receive the money for the SEP-IRA rollover money. The check, however, will only be for 80% of the total bill amount. The remaining 20% is retained as a commission. When the account holder opens the new retirement investment account and deposits the check into it, the initial investment firm holding the account will release the remaining 20% for deposit into the new account.
It is advisable to choose an indirect option only if the account holder will open and fund the SEP-IRA rollover account with the allotted time period, which can be up to 90 days from the withdrawal date. If the account holder does not have the means to do so before expiration, it is best not to use the indirect option.
The best option for a SEP-IRA rollover tends to be the direct option. This option is a faster, easier, and cleaner way to complete the transfer. The account holder simply opens the SEP-IRA rollover account. The new account company contacts the old account company and, with documents duly signed by the account holder, initiates the transfer of funds from the old account to the new account.
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