A rollover IRA is a retirement savings vehicle that allows you to move money from your former employer's retirement plan, like a 401(k), into an IRA. When you roll over to an IRA, you can maintain tax-advantaged status of your retirement savings when you follow the IRA rules.
What is a rollover IRA?
How does a rollover IRA work?
When you change jobs or retire and have savings left in your former employer's retirement plan, you typically have four options (PDF) when deciding what to do with your money.
If you opt to move your money into an IRA, you'll determine if a traditional IRA or Roth IRA is right for you. This generally depends on the type of money in your original account and your tax situation. It's common to roll pre-tax money into a traditional IRA and post-tax money into a Roth IRA.
You can usually open your IRA online, over the phone, in person, or by mail and then fund it by requesting to transfer money from your former employer's retirement plan to your new account.
What are the features of a rollover IRA?
Rollover IRAs allow you to:
- Maintain tax-deferred status of your retirement savings
- Choose from a broad range of investment options
- Consolidate other qualified accounts into an IRA
You may want to consider other retirement account options if you're:
- Planning to withdraw your money before age 59½
- Looking to take a loan from your retirement account
Why open a rollover IRA?
IRA might be a good fit if you're:
- Wanting a way to save alongside your company 401(k) plan
- Transitioning to self-employment
- Seeking access to a wide range of investment options
- Looking to simplify tracking and management of your savings by consolidating multiple retirement accounts
Please consider product features and fees before investing. Learn more about your retirement savings options (PDF).
Why choose Principal for your IRA?
See how an IRA with Principal® can fit into your long-term financial plans. Learn more about our IRA options.
Or, open your IRA with Principal today:
We offer options that are catered to your investing style.
- A Principal IRA keeps you in the driver’s seat. It gives you the control—with as much or as little assistance as you want to help you make informed investment decisions.
- A Principal® SimpleInvest IRA uses technology to create an investment mix personalized to you, that’s monitored and rebalanced on an ongoing basis.
- Let us connect you with a financial professional in your area to discuss a rollover IRA.
Want more information? Read our article on 3 steps for opening an IRA.
Help to simplify your retirement planning
We can help you consider all your options for your old 401(k) so you can feel confident you’re on track for the future you want.
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