Important Advice If you are about to take an IRA rollover, I have some advice for you.
First of all, you can only take a tax-free rollover IRA once in any 12 month period.
People often make the mistake of thinking that these types of transactions are penalty free, but only if you follow the rules.
Not only is there the "12 month rule", but you also have to worry about the "60-day rule".
If you do take an IRA rollover, you must deposit it with a new custodian within in 60 days of receipt.
Your current custodian is required to report the transaction to the IRS and he may be required to withhold 20% for taxes.
Of course, you may be able to get that back at the end of the year, but why take the risk and why bother with all of the paperwork that is required? Direct Rollovers and Transfers You can take a "direct" rollover IRA, also referred to as a transfer, and the fund will move directly from one custodian to another.
There are no reports filed with the IRS, no penalties and no taxes of any kind.
The financial institution that you are currently dealing with may charge a fee and many custodians charge a fee for setting up the account, but the IRS will not assess any taxes on the fund.
Before you take a rollover IRA, it is important to compare the different custodial companies that are out there.
You should compare the fees that they charge, the services that they offer and investment-types that they allow.
Earning More An IRA rollover account has the potential to earn more, when the custodian allows you to invest in anything that is allowed under the current tax laws.
Currently, a rollover IRA can be invested in stocks and bonds, which you probably know, but it can also be invested in mortgage notes, deeds of trust, small corporations and real estate.
Now Is A Great Time For Real Estate This is a good time to invest in real estate.
Actually, anytime is a good time, but because of the building choices made during the "bubble", there is a surplus of high-priced homes and a shortage of moderately priced affordable housing.
There are truly no "starter" homes, these days.
You can use an IRA rollover to fill this "gap" in the market.
If you remember, twenty years ago, it was possible to buy a small two-bedroom home for around $50,000 and still live in a decent neighborhood.
Today, in many areas of the country, there are no homes that cost less than $250,000.
How can a teacher, a single parent, a social work or a policeman afford that? What about a construction worker or a factory employee? These people are the "core" of our society and they have been "left out" of the dream of home ownership.
With a rollover IRA, you can help and still earn higher returns than you could in the stock market.
Hopefully I've given you the information that you need to make a tax-free IRA rollover and also given you something to think about.