Why rollover of retirement plans? Because Retirement plans have taxation issues at the time of withdrawal . So, when you quit or leave a job, you may have up the options to withdraw funds, but then you will have to pay the tax on the withdrawal . There are two options for you under which you may not be paying tax – either rollover to new employer or rollover to IRA .
. So , if you withdraw from a retirement plan, you might have to pay the tax . By rolling over, you’re preventing taxation of your savings and therefore the kitty grows further. If you don’t roll over your payment, it will be taxable (other than qualified Roth distributions and any amounts already taxed) . Further, you may also be subject to additional tax unless you’re eligible for one of the exceptions to the 10% additional tax on early distributions.Read More »Rollover of Retirement Plans : A Quick Guide !