IRA owners and their advisors can make expensive mistakes handling IRA rollovers. These mistakes range from the simple to the complex. A simple mistake occurs when an employee takes a check when they retire and their employer must withhold 20%. In order to complete a tax-free rollover, the IRA owner needs to replace the 20% withheld by their employer using their own funds to meet the tax-free rollover requirement within 60 days (more on this later). Then there’s the more complex mistake—the advisor who does not realize that his client may be ahead by distributing employer stock and paying taxes now (likely at 15% federal) rather than rolling over employer stock and paying up to 37% later.
Read on for the dos and don’ts of handling IRAs by clicking the article below!