6 Things About IRA Rollovers That Every IRA Owner Should Know
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6 Things About IRA Rollovers That Every IRA Owner Should Know

By Sarah Brenner, JD IRA Analyst


Sarah Brenner

The road to retirement is long. Along the way you may need or want to move your retirement funds. Maybe you are leaving a job or maybe you are just looking for a new investment strategy. When the time comes to make a move, you will want to be sure that everything is done correctly. Rolling over retirement funds can be tricky and the consequences of a mistake can be serious. Here are 6 things about rollovers that every IRA owner needs to know.

1. How rollovers work
A 60-day rollover starts with a distribution from a retirement plan payable to you. The distribution can be from a company plan or an IRA. You will have receipt of the funds.

A direct rollover is paid from a company plan to another company plan or IRA. Though this transaction is called a “rollover,” it is very different from a 60-day rollover because you do not have receipt of the funds. A direct rollover avoids the mandatory 20% withholding that applies to rollover-eligible distributions from company plans.

When funds are moved directly between IRAs that transaction is not a rollover. It is instead a transfer. In a transfer, the funds are sent directly from one IRA custodian to another. Transfers are not subject to the many rules that restrict rollovers.

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