Understanding Rollover IRA
When moving a retirement account from a former employer, you have three options: leave the money in your old plan, cash it out, or roll it over into a new retirement account. Rolling over is often the best choice as it consolidates your retirement funds and provides more investment options.
How Rollover to an IRA Works
An IRA (Individual Retirement Account) is a tax-advantaged account that offers a range of investment opportunities, including stocks, bonds, mutual funds, CDs, and ETFs. The 2025 contribution limit for a traditional IRA is $7,000 for people under 50 and $8,000 for those 50 or older.
Key Benefits and Requirements
- IRA contributions may be tax-deductible, depending on your income, filing status, and whether you have 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.
No account minimum for active investing through Schwab One® Brokerage Account.
Author's summary: Rollover IRA consolidates retirement funds and offers investment options.
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