A:

This is based on the rules that an individual can roll over a portion of his or her retirement plan balance, rather than rolling over the entire balance. According to the rules, if an individual rolls over only a portion of his retirement account balance, the portion that is rolled over is deemed to include the pre-tax amount first. Therefore, if the participant has a balance of $100,000, of which $20,000 is after-tax amounts, and he rolls over only $80,000, the $80,000 is attributed to his pre-tax balance. If the participant elects to roll over only a portion of his balance, the custodian is required to pay the amount elected to be directly rolled over to the IRA custodian or plan to which the person elected to have the amount rolled over. For the amount that the participant elected not to have rolled over, the plan cannot make that amount payable to an IRA or retirement plan.

For more information, see IRS Publication 575.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. What are the financial benefits of retiring in the Philippines?

    Read about the many financial benefits of retiring in the Philippines as an American expatriate, including low health costs ...
  2. How can I get a 'pensionado' visa to retire in Costa Rica?

    Read about how you can obtain a pensionado visa to retire in Costa Rica, including what kinds of applicants the Costa Rican ...
  3. What option strategies can I use to earn additional income when investing in the ...

    Discover how risk-averse investors need to build a retirement portfolio. The major factors are diversification and avoiding ...
  4. How do you mediate a dispute between primary and contingent beneficiaries of a trust?

    Learn about some of the different methods for resolving disputes between primary and contingent beneficiaries on transfer ...
RELATED TERMS
  1. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  2. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  3. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  4. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  5. Variable Annuitization

    An annuity option in which the amount of income payments received ...
  6. Gold IRA

    Definition of Gold IRA

You May Also Like

Related Articles
  1. Mutual Funds & ETFs

    Top 7 ETFs Designed for Retirement Income

  2. Professionals

    5 Signs That You Have a Lousy 401(k) ...

  3. Entrepreneurship

    Why Small Business Owners Need Financial ...

  4. Mutual Funds & ETFs

    Top Commodities ETFs for Your Retirement ...

  5. Professionals

    How the Robo-Advisors Differ (& How ...

Trading Center