Moving a Retirement Account: Understanding Rollover IRA
When leaving a job, you have three main options for your retirement account: leave the money in the old plan, cash it out, or roll it over into a new account. Rolling over is often the best choice as it consolidates retirement funds and gives more investment options.
How Rollover to an IRA Works
An Individual Retirement Account (IRA) is a tax-advantaged account offering various investment opportunities, including stocks, bonds, mutual funds, CDs, and ETFs. The 2025 contribution limit for a traditional IRA is $7,000 for those under 50 and $8,000 for those 50 or older.
Key Points About IRA Contributions
- IRA contributions may be tax-deductible, depending on income, filing status, and the presence of a workplace retirement plan.
- You can open an IRA at most big brokerages, with varying minimum deposit and balance requirements based on the investment vehicle selected.
- Some accounts, like the Schwab One® Brokerage Account, have no account minimum for active investing.
Rolling the money over is often the best choice because it consolidates your retirement funds, plus gives you more investment options.
Author's summary: Rollover IRA consolidates retirement funds and offers more investment options.