roll over
Rollover means to extend a particular financial agreement.
- In the context of retirement accounts, rollover often refers to transferring funds from one Individual Retirement Account (IRA) to another traditional IRA or Roth IRA, or from a qualified retirement plan into an IRA. It could also happen when funds are transferred from a retirement plan sponsored by an employer, such as a 401 (k) or a 403 (b) into an IRA retirement account. This transfer is reported on an IRS Form 1099-R . Most retirement rollovers are tax-free events, meaning that no tax payment is required before withdrawing funds from the new plan. Such a tax-deferred status allows more flexibility for account holders to choose from a variety of investment plans other than the one offered by the employer. Such a flexibility also offers more choices for plans with lower administrative fees.
- In the context of corporate loans, a rollover can refer to a loan under a revolving credit facility to repay a maturing loan under that facility. In other words, a rollover is borrowing under the same facility to repay existing debt that is coming due. There are alternatives to rolling over a loan, such as refinancing their existing loans, consolidating debts, and liquidating assets. Rolling over a loan could potentially impact a borrower’s credit history. If a credit agency believes that a roll over is triggered by stressful financial situations, then it may leave negative elements on a borrower’s creditworthiness.
[Last reviewed in March of 2025 by the Wex Definitions Team]
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