A Rollover IRA is a special type of Individual Retirement Account used to hold funds transferred from an employer-sponsored retirement plan, like a 401(k), after you leave a job.
In Depth
When you leave a job, you often have the option to move your old 401(k) or other workplace retirement savings into a Rollover IRA. This allows your money to continue growing tax-deferred until retirement. It also gives you more control over your investment choices than many employer plans. You can typically roll over funds from a traditional 401(k) to a traditional IRA, or from a Roth 401(k) to a Roth IRA, maintaining the original tax treatment.
Example
After changing jobs, Sarah decided to open a Rollover IRA to move her old 401(k) funds, giving her more investment flexibility.