Quick Answer
Retirement-account operations identify the account type, apply contribution and required distribution requirements, and classify asset movement correctly. An individual retirement account is established for an individual, while an employer-sponsored retirement account is provided through an employer arrangement. A transfer moves assets between custodians or trustees; a rollover involves a distribution and reinvestment.
After identifying the account, operations must identify whether the request concerns funding, a required distribution, or a movement of assets.
Retirement Account Types
| Account type | Core purpose |
|---|---|
| Individual retirement account | A retirement account established for an individual. |
| Employer-sponsored retirement account | A retirement account provided through an employer arrangement. |
Contribution and Distribution Requirements
- Contribution limits: Identify the applicable limit before accepting a retirement-account contribution.
- Required minimum distributions (RMDs): Identify when a required distribution applies, then process the distribution as required.
Applicable requirement -> determines whether the requested contribution or distribution can be processed.
Transfers and Rollovers
| Movement | Core distinction |
|---|---|
| Transfer | Retirement-account assets move between custodians or trustees. |
| Rollover | Assets move through a distribution and reinvestment into another eligible retirement account. |
Think of it this way: A transfer stays on the custodian or trustee track from one holder to another. A rollover takes a distribution-and-reinvestment track. The destination may be another eligible retirement account in either case, but the route is what operations must identify.
Exam Tip: Gotchas
- Transfer and rollover are not interchangeable. Identify the movement the customer requested before processing it: a transfer is between custodians or trustees, while a rollover involves a distribution and reinvestment.