The Rollover IRA is established and funded with monies that have come from a qualified plan such as a 401k, 403b, or lump sum pension.
The Rollover IRA is also a Traditional IRA- the Rollover simply is a label meaning money has come from an employer plan.
You'll generally move assets from your qualified plan into the Rollover IRA when you change jobs, retire or when your company changes their existing plan and and adopts a new plan provider.
Unlike the Roth IRA or Traditional IRA which are funded with your contributions-the Rollover IRA is funded by having your employer transfer your funds directly to the IRA with a "direct rollover".
If the funds are distributed directly to you, you'll have 60 days to deposit them into the IRA.
The Roth is now eligible (January 2008) to receive assets from an employer plan-it is a taxable event . Most financial planners suggest rolling to the Traditional IRA or Rollover IRA and converting to a Roth at a later time.
Anyone who receives a distribution from a retirement plan.
There are no contribution limits. Many IRA custodians will set up this account as a "zero-balance" account and allow funding later with the amount of your former employer balance.
In addition, you can even make contributions to this Rollover IRA each year going forward.
Visit the Rollover Center to learn more.