Rollover

A rollover is a transfer of funds from one tax-deferred retirement savings plan to another. Once a year you are allowed to take your money out of one IRA tax-free and put it into another. You have 60 days to complete the rollover, which means you can tap your nest egg for a short-term loan. But be sure to put the money into a new fund on time or you will be liable for income taxes -- and a 10% penalty if you are under 59½.

You can usually roll over funds tax-free from your 401k or other employer-sponsored plan when you change jobs. You must put it into another qualified retirement plan such as your new company's plan or an IRA. Make sure the check is made out to the new plan custodian. Otherwise, your previous employer is required to withhold 20% for pre-payment of federal income taxes. You may also have to pay a 10% penalty. You can avoid the taxes and penalty if the funds are transferred directly to the new plan. Before leaving your company, ask for instructions on how to handle a rollover (even if you do not yet have a new employer) in a way that will not trigger automatic withholding. If your 401(k) balance is greater than $5,000, you also can leave your money to grow tax-free in your account.