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Direct Rollover

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Direct rollover
Movement of tax-deferred retirement plan money from one qualified plan or custodian to another. No immediate tax liabilities or penalties are incurred, but there is an IRS reporting requirement.

Direct Rollover
The transfer of funds from an IRA to another qualified retirement account owned by the same person or vice versa. Rollovers happen most often when an employee changes jobs and therefore IRA accounts. A direct rollover goes directly from one account to the other; it is not distributed to the account holder at any point. A direct rollover may only be done once per year for each account. One must report a direct rollover to the IRS, but it is not taxable.


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an employer plan must offer the distributee the right to have the distribution made in a direct rollover and, before the distribution, the plan administrator must give the distributee a written explanation of the direct rollover right and related tax consequences.
Direct rollover election required: A qualified plan must permit any distributee to elect a direct rollover to a Roth IRA (subject to existing exceptions for small amounts and multiple distributions).
In general, the PPA allows for direct rollovers of the entire balance of workplace plans into either a Rollover IRA or a ROTH IRA.
 
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