Direct rollover

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.
Mentioned in ?
References in periodicals archive ?
A direct rollover may be in the form of a trustee-to-trustee transfer accomplished through a wire transfer or a check made payable to the trustee.
Either leave it where it is or do a direct rollover.
On September 18, 2014, the IRS released Notice 2014-54 ("Guidance on Allocation of After-Tax Amounts to Rollovers"), which definitively authorizes clients to complete a direct rollover of their pre-tax plan funds to a traditional IRA while simultaneously allowing them to complete tax-free Roth IRA conversions of their after-tax plan funds.
402A-1, Q&A-5(a) provides that "any amount paid in a direct rollover is treated as a separate distribution from any amount paid directly to the employee.
Thus same-sex spouses are entitled to survivor annuity protection in pension plans, automatic account balance death benefits in 401(k) and 403(b) plans and have direct rollover treatment on a spouse's death.
But your employer must also allow you to make a direct rollover to an IRA or to another employer's 401(k) plan.
Revenue Ruling 2012-4 describes whether a qualified defined benefit pension plan (that accepts a direct rollover of an eligible rollover distribution from a qualified defined contribution plan maintained by the same employer) satisfies SS411 and SS415 of the IRC in a case in which the defined benefit plan provides an annuity resulting from the direct rollover.
If your client's rollover form from a previous carrier asks what type of distribution this is, you want to be sure to choose a Direct Rollover.
A taxpayer may roll over all or part of a distribution from an eligible retirement plan to a Roth IRA (a conversion transaction) either by a direct rollover to the Roth IRA or by rolling over the amount received within 60 days.
A direct rollover from a traditional IRA or a Roth IRA to a charity will be tax-free if it meets the requirements of a qualified charitable distribution.
This would also be the case for a direct rollover to a traditional IRA account-all distributions from the IRA would be fully taxable as income.
Generally, distributions from an employer plan can be rolled over tax-free into another employer plan or IRA by contributing the amount of the distribution to the other plan or IRA within 60 days of the distribution, or by a direct rollover by the plan to the other plan or IRA.