What is a Rollover?

A rollover involves the transfer of funds from one investment to another. These transactions usually involve the transfer of funds between similar investment vehicles, though a treasury department may shift funds into investments with different maturities , depending on when the cash is expected to be needed. Rollovers are especially useful when shifting funds between retirement accounts, since rollover transactions do not trigger taxable events.

Example of a Rollover

As an example of a rollover, an investment in a U.S. Treasury instrument matures, releasing funds that can then be rolled over into a new Treasury instrument. As another example, a person rolls the contents of his 401(k) retirement account into the new 401(k) account that he has just opened with a new employer.

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