CFP

Distribution Rules, Alternatives And Taxation - Direct Transfer

Direct Transfer
A direct transfer of retirement plan funds from one plan to another, without coming into possession of the individual taxpayer, allows the taxpayer to avoid the 20% withholding on a rollover. There are two types of direct transfers:
  1. Trustee-to-Trustee Transfer – A transfer of traditional IRA funds directly from one trustee to another. Because it is not considered a rollover, such transfers are not affected by the one-year waiting period applied to rollovers.
  2. Direct Rollover – A transfer from an employer's qualified plan directly to the trustee of a traditional IRA.


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