Conduit IRA

Just as a conduit can help guide something from point A to point B, a conduit IRA can help in the transfer of funds from one employer’s qualified retirement plan to another. Also known as a rollover IRA.

Joan left a crappy job where she had started a 401(k) account. While she's looking for a new job, she needs a place to store her assets, since there's an IRS requirement that any rollovers need to take place within 60 days, or she could incur early withdrawal penalties. So she decides to open a conduit IRA account just in case it takes her more than 60 days to get a new job and open a new retirement plan with a future employer.

Unfortunately, Joan will not be able to add money to the conduit IRA, but if she's job hunting she may not have much extra cash anyway. But there's no limit to how much you can transfer into the conduit, and there is no minimum or maximum time you have to leave money in there. So if Joan wins the lottery and never has to work again, she can leave her funds in the conduit IRA indefinitely. We're pulling for you, Joan.