When people think about their IRA accounts, a lot of people get confused between IRA rollover and an IRA transfer. To many people this is one and the same thing. In fact they are very different. When you rollover an IRA account, you are basically moving one IRA onto another IRA. When you are transferring investments into an IRA account, you are basically eliminating one investment basket so to speak and putting everything in one central investment location. This is the big difference. You have to be clear as to the difference between the gold IRA rollover and a transfer, otherwise you might incur all sorts of fees. In fact, if you do not play your cards right you might possibly loose some tax benefits of using an IRA.
Control of the account. Another difference between gold IRA rollover and a transfer account is the control over the account. When you use a gold IRA rollover, you basically have to contract with an IRA custodian. This is a financial company that basically baby sits your IRA. With a transfer, you are basically aggregating your investments into an existing account.
Funding scheme. The funding scheme and the gold IRA rollover and transfer are basically the same. You are basically taking funds from one account to another. The big difference is that in rollovers one account can still survive, in transfers you basically eliminate one account over the other. This is a key step in understanding the difference between a gold IRA rollover and a transfer account. Also, another key consideration is the additional funds. With gold IRA rollover you are basically taking existing funds and rolling them over. With the transfer you can either add more money or just transfer from an existing basket of funds. This may seem confusingly similar, however there are different regulations that might come into play. Also, there might be restrictions that may be involved. You have to be very careful as to the designation of your particular investment decision. If you make the wrong choice and your action is designated a certain way, you might be liable for certain taxes or you might have to pay higher fees.
In terms of taxation and liabilities, you have to remember that when you rollover an IRA, you are taking a payout. If you don’t want to get taxed due to this cash out, you need to put the funds into another IRA within 60 days. The federal government gives you this grace period so you can avoid taxes. Otherwise, you’ll have to pay taxes on your IRA. This can be quite heft. A transfer has no tax consequences since the check never goes to you. Unlike a rollover situation where you cash out of an earlier fund, when you do an IRA transfer from one fund to another, you direct the check to be sent to the new IRA custodian. The check is never sent to you. A rollover is an exit while a transfer is just that-a transfer.