Rollovers

If a person who is nearing retirement or has recently changed jobs, rolling over their employer sponsored plan to fund an IRA is referred to as a Rollover. A rollover can be done at any time.

There are two types of rollovers, indirect and direct. An indirect rollover, the check is made out in the customer's name and the customer has 60 days to deposit it into a new qualified account. The check is reduced by 20% mandatory withholding in the case of an indirect rollover of an employer-sponsored plan into an IRA. Any amount of the distribution (including the amount withheld) that is not rolled over into the IRA within 60 Days is subject to income tax and potentially a 10% penalty tax.

A direct rollover, the check is made out to the trustee or custodian of the new IRA account who will then allocate it according to the client's direction. The company receiving the money will facilitate the transfer from the employer.