Don't Make These Severe IRA Rollover Mistakes

IRAs, or Individual Retirement Accounts (or Arrangements), are one of the most popular ways to save for retirement. They come with impressive tax breaks, which makes them ideal for saving up money. However, people often make a lot of mistakes when it comes to handling their IRA. Make sure you’re not making any of these common ones!

Not getting help if you needed it

If you’re ever confused about what exactly is going on with your IRA, then get help! Either ask someone in the financial department of your workplace or go to an independent financial advisor. After all, it’s your money in there.

Rolling over when you should be transferring (and vice versa)

Rollovers and transfers are two different things, though they appear similar if you’re just looking at the mechanics. A few people make the mistake of doing one when they should be doing the other. Make sure you know the differences!

Using cash when you’d prefer to use precious metals

You don’t have to use cash if you don’t want to. A lot of people assume that you need to go from cash to cash when you’re doing an IRA rollover. But you can use other assets if you’d prefer to go that route. Using precious metals as a way of keeping your money secure. Don’t miss out on using something like gold if you’re more comfortable with it! Find out more about gold IRA rollover if you’re interested.

Not doing your research

A lot of people are tempted to think as little about their IRA as possible. Once it’s set up, they’ll tend to it on rare occasions, and only when they have to. But your IRA is a very dynamic and complex thing. The amount of opportunities you’ll have for bigger tax breaks and bigger cash investments will be many. If you don’t know the ins and outs of your IRA options, then you could be missing out. Set some time aside to do some heavy research!

Putting in too much

Technically, there aren’t limits when it comes to what you can put into your IRA. But you could start facing penalties or reduced tax cuts if you start putting in too much. How much constitutes as “too much” will really depend on what institution you’re holding your IRA with. But, in general, being excessive will suggest to the IRS that you’re taking a few too many liberties with their goodwill. They’ll assume that you’re going to take that money out early, having saved it from taxes. Speaking of which…

Withdrawing too early

The point of an IRA, of course, is that it helps fund your retirement. If you take that money out early, the IRS will get a bit annoyed. You’ll often be hit with a penalty of 10% of what you’re taking out, at least, if you’re below the age of sixty. There are some circumstances in which you won’t be hit with this penalty. They’re not circumstances that you can really force, though. They fall into the category of “compassionate” breaks. High college costs or medical fees can see the penalty being waived, for example.