What Are Rollovers?

From AIG Funds

Understanding Rollovers

Rollovers are assets that are transferred from one retirement plan to another. The Internal Revenue Service (IRS) allows rollovers between certain types of IRAs and employer-sponsored retirement plans, known as eligible retirement plans.

Retirement plans that are eligible for rollover include:

  • IRAs - these retirement accounts offer tax advantages to help investors save for the future. There are many different kinds of IRAs. Some are designed for individuals and others for businesses. Visit the IRA Center for more information.

  • 401(k) plans - 401(k)s are employer-sponsored retirement plans that allow employees to defer money from their salary on a pre-tax basis. Employees can invest this money in wide range of investment options. Earnings in a 401(k) accrue on a tax-deferred basis. In addition, many employers with a 401(k) plan offer matching contributions to encourage employees to invest for retirement.

  • Defined Benefit (DB) plans - these employer-sponsored plans provide retired employees with income based on a set formula rather than on the return of the invested assets. With DB plans, the company has full control of the investments, not the individual employees.

  • 403(b) plans - otherwise known as tax-sheltered annuities (TSAs), 403(b) plans provide retirement savings opportunities for certain employees of public schools, tax-exempt organizations and churches.