What is roll over

Question

What is roll over

Accepted Answer

Roll over is a term used to describe the action of extending the maturity date of a financial instrument or investment.

Roll over is commonly used in the context of fixed income securities, such as bonds or certificates of deposit.
It allows investors to continue holding their investment beyond its original maturity date.
Rolling over can involve reinvesting the principal and any accrued interest into a new instrument with a longer maturity.
It can also refer to the process of transferring funds from one retirement account to another without incurring tax penalties.
For example, a bondholder may choose to roll over their maturing bond into a new bond with a higher interest rate.
In the case of retirement accounts, an individual may roll over their 401(k) balance into an IRA to maintain tax advantages.

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