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.