In an individual retirement account (IRA), rollover contributions are:

• A. Transfers of funds from one retirement account to another without tax consequences if completed within a specified period.
• B. Employer-matched contributions deposited into a traditional IRA.
• C. Annual contributions made directly by the account holder from earned income.
• D. Withdrawals taken from an IRA before age 59½.

Answer: (A)

Verified step by step guidance

1. Understand the concept of rollover contributions in the context of an Individual Retirement Account (IRA). Rollover contributions refer to the transfer of funds from one retirement account to another without incurring tax consequences, provided the transfer is completed within a specified period.
2. Review the key characteristics of rollover contributions. These transfers are typically done to consolidate retirement accounts or move funds to a new account type, such as from a 401(k) to a traditional IRA.
3. Compare rollover contributions with other types of IRA transactions, such as employer-matched contributions, annual contributions made by the account holder, and withdrawals taken before age 59½. Note that rollover contributions are distinct from these other transactions.
4. Identify the tax implications of rollover contributions. Ensure that the transfer is completed within the allowed timeframe (usually 60 days) to avoid penalties or taxes.
5. Confirm that rollover contributions do not involve new contributions from earned income or withdrawals from the account. They strictly pertain to the movement of existing funds between retirement accounts.