How to Roll Over a Traditional IRA

Keeping your nest egg safe and growing is incentive for rolling over your IRA.

In today's volatile economy, rolling over your traditional IRA to a Roth IRA or employer 401(k) is a move that is worth considering. According to Scottrade, there are three reasons to consider rolling over a traditional IRA to a Roth IRA. There are "no income limits for converting a traditional IRA to a Roth IRA, the opportunity for your investments to grow tax-free and deferred conversion taxes for 2010 only--50 percent of the taxes on the conversion would be due in 2011 and the other 50 percent in 2012."

Things You'll Need

• Conversion form from your financial institution or employer
• Tax Form 1099

Instructions

1. Determine what forms you will need to complete your conversion. According to Wade Wacker, registered representative of Invest Financial Corporation, "knowing what to ask for" is probably the hardest part of rolling over your traditional IRA.

2. Contact the appropriate person to retrieve conversion forms. If you are rolling over your traditional IRA to an employer 401(k), you would approach your human resources representative and ask for a conversion form, but if you are rolling it over to a Roth IRA, you should call your financial institution and ask its representative for the appropriate conversion form.

3. Review and sign the conversion form. Many times the places for your signature will already be highlighted for you by your financial adviser or human resources representative.

4. Send in your signed conversion form.

5. Fill out Tax Form 1099 and pay any applicable taxes if you are rolling over from a traditional IRA to a Roth IRA.

Tips & Warnings

• Make sure that all paperwork is fully completed.

References

• Scottrade: Roth IRAs
• Wade Wacker, Registered Representative of Invest Financial Corporation, Jackson, Minnesota