Rollover

Rollover

1. The process of reinvesting funds from a mature security into a new issue of the same or a similar security.

2. The process of transferring the holdings of one retirement plan to another without suffering tax consequences.

Investopedia Commentary

1. When you own an option about to expire, and assuming that you believe it will still be favorable to hold, you may decide to buy/sell the later expiring option.

2. When moving from one company to another, retirement plans may be moved in order to forgo tax consequences. The distribution is reported on IRS Form 1099-R and the rollover contribution is reported on IRS Form 5498. Rollovers may be limited to one per twelve-month period for each IRA, and the assets are generally made payable to the retirement account holder. The assets must then be deposited to the receiving retirement account within 60 days after the account holder receives the assets.

Related Links

Introductory Tour through Retirement Plans
Exceptions To The 60-Day Rollover Rule

See also: Eligible Rollover Distribution, Maturity, Transfer

rollover

The reinvestment of money received from a maturing security in another similar security. Rollover usually applies to short-term investments such as certificates of deposit, commercial paper, and Treasury bills. For example, investors often want a rollover of the proceeds from a maturing certificate of deposit into a new certificate of deposit. See also IRA rollover, pension rollover.