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Chapter 19. Roll, Roll, Roll It Over > What Is a Rollover? - Pg. 185

185 Chapter 19. Roll, Roll, Roll It Over In This Chapter · What is a rollover? · Why do a rollover? · When you can and can't do a rollover · What can and can't be rolled over · Fine print and food for thought · Leave it--an alternative to rollovers By now, hopefully, we've convinced you that you should be using your 401(k) plan to the maximum! It's simply the best tool you can use to reach your retirement goals. But what if you leave the company before you're ready to retire? Or what if you lose your job? Does Uncle Sam finally get his chance to tax your savings? The good news is, no. You can continue to save and invest toward your future, but you need to know your options. Specifically, you need to know what to do with your 401(k) money if you leave your employer. Let's see how using a rollover keeps your savings in the game. What Is a Rollover? A rollover is a tax-free transfer of money that you remove from a 401(k), IRA, or other qualified retirement plan (403[b], 457 plan, pension plan, profit-sharing plan, or ESOP) by "rolling it over" to another qualified plan. If you do a rollover correctly, the amount rolled over will not be subject to taxes until you take out the money sometime in the future. If you do it wrong, at best, you'll pay some tax immediately, and, at worst, you'll forever lose your chance to defer taxes on this money until retirement. The rules governing rollovers to and from IRAs and 401(k)s are similar, but there are some differ- ences. After reading this chapter, if you are still unsure about what you should do when making a rollover, seek the help of a qualified tax professional.