How are IRA Rollovers from employer-sponsored plans accomplished?
The employee usually has a choice of two methods to accomplish the IRA Rollover – the direct rollover or the indirect rollover. Direct Rollover In a direct rollover, which is also sometimes called a “plan-to-plan transfer,” the eligible rollover distribution that is transferred directly by the employer-sponsored plan to the employee’s IRA. The funds are never actually transferred to the employee individually. Indirect Rollover Under the indirect rollover method, the employer-sponsored plan writes a distribution check to the employee, who then deposits the check in his or her own account. The employee then has 60 days to transfer all or a portion of the amount received in the distribution to an IRA. The distribution is not taxable to the employee if the transfer occurs within 60 days.
