1996 Tax Help Archives  

Rollovers From Retirement Plans

This is archived information that pertains only to the 1996 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

A rollover is a tax-free transfer of funds from a qualified employer retirement plan to another qualified employer retirement plan or to an IRA. You can roll over most distributions except:

1.The nontaxable part of a distribution, such as your after tax contributions to a retirement plan,

2.A required minimum distribution, or

3.A distribution that is one of a series of payments based on life expectancy or paid over a period of ten years or more.

Any taxable amount that is not rolled over must be included as income in the year you receive it.

You can choose to have your employer transfer a distribution directly to another eligible plan or to an IRA. If the distribution is paid to you, you have 60 days to roll it over. Any taxable distribution paid to you is subject to a mandatory withholding of 20%, even if you intend to later roll it over. If you do later roll it over and want to defer tax on the entire taxable portion, you will have to add funds from other sources equal to the amount withheld.

If you are under age 59 ½ at the time of the distribution, any taxable portion not rolled over may be subject to a 10% additional tax on early distributions.

For further information about rollovers, see Publication 575.

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