What Is a Rollover?

A rollover generally means moving an asset or position from one account, security, or delivery date to another. Common uses:

• Retirement rollovers — transferring retirement-plan assets from one account to another without triggering taxes.
• Security rollovers — reinvesting proceeds from a maturing security into a new issue.
• Forex rollovers — rolling an open FX position to the next delivery date, which typically incurs a charge or credit based on interest-rate differences.

Rollovers in Retirement Accounts

How they work
* Direct rollover (trustee-to-trustee): The plan administrator sends assets directly to the new plan or IRA. You never receive the funds and the transfer is not taxable.
* Indirect rollover: The plan sends a distribution to you; you must deposit all funds into another eligible retirement account within 60 days to avoid taxes and penalties. If not completed in 60 days, the distribution is taxable and—if you’re under age 59½—may be subject to a 10% early-withdrawal penalty.

Important rules and considerations
* 60-day rule: Applies when you receive a distribution (check or cash). You have 60 days to redeposit the full amount into another qualified retirement account to avoid a taxable event.
* IRA one‑per‑year rule: The IRS limits certain types of IRA-to-IRA indirect rollovers to one per 12-month period per IRA. Direct rollovers and trustee-to-trustee transfers are not subject to this limit.
* 1099-R reporting: Distributions are reported on IRS Form 1099-R. Keep records and consult a tax professional for specifics.
* Rollover for Business Startups (ROBS): A complex option that lets entrepreneurs use retirement funds to start a business without taking a taxable distribution or loan. Because of legal and operational complexities, work with experienced providers and advisors.

Rollovers in Forex (FX) Positions

What a forex rollover is
* In FX trading, rolling a position means extending its settlement to the next delivery date. That extension results in a rollover charge or credit (often called the swap), paid or received by the trader via the broker.

How the swap is calculated
* Swap points = forward rate − spot rate (expressed in pips). The swap reflects the net cost or benefit of lending one currency while borrowing another over the rollover period.
* Interest-rate parity underlies swap calculations: differences in currency interest rates determine whether the rollover will be a cost or a gain.
* Traders profit when they hold the currency with the higher interest rate while shorting one with a lower rate, generating positive rollover payments over time.

Key Takeaways

• “Rollover” covers several actions: transferring retirement assets, reinvesting maturing securities, or extending FX positions.
• Direct (trustee-to-trustee) rollovers of retirement accounts typically avoid immediate taxation; indirect rollovers must be completed within 60 days to avoid taxes and penalties.
• IRA indirect rollovers are subject to a one-per-12‑month limit; direct rollovers are not.
• Forex rollovers produce swap fees or credits based on interest-rate differences and are an ongoing cost or income source for carry-trade strategies.
• For tax or compliance questions—especially with complex options like ROBS—consult a tax or financial advisor.