How to Roll an IRA Into an Employer Plan

The term "rollover" broadly refers to the process of moving your retirement savings either between accounts or financial institutions. Typically, most people roll over their 401(k) or other employer sponsored plan into an IRA, which is one of the easiest types of rollovers; however, you can usually rollover an IRA into an employer sponsored plan without much difficulty. Any decision regarding your retirement accounts is an important one that requires careful consideration. Thus, you should consult with a qualified financial advisor before you roll your accounts over.

Instructions

1. Determine whether it makes financial sense to roll your IRA over into an employer sponsored plan. Typically, employer sponsored plans come with additional administrative fees, are harder to take early distributions from, and limit your investment choices more than an IRA will.

2. Ensure that your employer sponsored plan permits the rollover. You can either consult with the program literature of your plan or ask your company's financial administrator directly. While most plans allow you to roll over your IRA, you can typically only roll over the tax-deferred portion of your contributions and earnings.

3. Withdraw your savings from your IRA and put them into your employer sponsored plan within 60 days. If you fail to roll over your retirement account within the prescribed amount of time, you may be subject to a 10 percent penalty and taxes for taking an early withdrawal.

4. Deduct any portion of your contributions and earnings in your IRA that are not tax deferred. This portion of your IRA cannot be rolled over into your employer sponsored plan.

5. Determine how to invest your funds in your employer sponsored plan. Most employer sponsored plans offer a selection of mutual funds and investments you can choose within the plan. Be sure to select those investments that are consistent with your overall retirement plan.

6. Account for the rollover on your federal income tax return. While a rollover is a nontaxable event, you still need to report it on your taxes.

Tips & Warnings

• Do your homework and make sure the eligible retirement account you are moving funds to is ready before you withdraw money from your IRA. There are time sensitive deadlines you must meet to avoid penalties.

• Some rollover decisions may be irrevocable. Thus, you should always consult with a qualified financial advisor to better understand the ramifications of your decision to roll your IRA over into an employer sponsored plan.

References

• IRS.gov: Publication 590: Individual Retirement Arrangements (IRAs)
• IRS.gov: Topic 413 -- Rollovers from Retirement Plans