IRA is a retirement plan that protects the tax deferred status of an individual's account and which is designed to receive money from a qualified retirement plan. The need for a Rollover IRA may arise because an individual retires, changes employers, is permanently disabled, is part of a qualified plan that has been terminated or simply because the individual is not satisfied with the party handling their account. An IRA may be rolled over once a year. In a Rollover situation, the individual receives a check for the proceeds of their retirement plan. The individual must reinvest these funds into an IRA within 60 days.
Participation depends on company specific rules.
Contributions are made on a pre-tax basis and contributions and investment earnings can grow tax deferred until withdrawal at retirement, at which time they are treated as ordinary income. Employees participating in a SEP IRA may invest in regular IRAs. Participation depends on company specific rules. Both the employee and the employer may make contributions. Contributions are made on a pre-tax basis and contributions and investment earnings can grow tax deferred until withdrawal at retirement, at which time they are treated as ordinary income.