Transfer vs. rollover: What is the difference?

Asked 3 years ago

Hi, I have an IRA account, and I'm not sure I understand the difference between a rollover and a transfer. Here are several questions that run in my head when I think of rollover: What is qualifies as a rollover? Is a transfer the same as a rollover? Does a rollover need to be reported? Thanks a mil!

Fund transfer Rollover Ira account

Andia Rispah Igobwa

Wednesday, September 22, 2021

A rollover differs from an IRA transfer in that a transfer happens between retirement accounts of the same type, whereas a rollover occurs between two different types of retirement plans.
A transaction is a transfer if you move assets from one IRA to another, for example. A rollover is a change in an employer-sponsored retirement plan into an individual retirement account (IRA).
When you convert a traditional IRA to a Roth IRA, it's known as a Roth conversion. The distinction is significant since the IRS classifies these procedures differently for tax purposes.