A Conduit IRA, sometimes also called a Rollover IRA, is a type of individual retirement account that is used as a vehicle to transfer funds from one retirement account to another without incurring any tax liabilities. This type of IRA is often used when an individual changes jobs and wants to move the money they have accumulated in their employer-sponsored retirement plan (like a 401(k)) to another retirement account.

The term “conduit” refers to the fact that these IRAs serve as a pathway for the funds, essentially acting as a conduit between the old retirement account and the new one. Importantly, a conduit IRA should only hold assets that have been rolled over from previous retirement accounts. If other contributions are made to the account, it could lose its status as a conduit IRA and could potentially have tax implications for the account holder.

Please note that the tax laws and regulations related to retirement accounts can be complex and subject to change, so it’s always a good idea to consult with a financial advisor or tax professional for guidance specific to your situation.