IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
What is IRA Rollovers vs. Transfers?
In a rollover, the owner takes possession of the funds and must redeposit them within 60 days to avoid tax. Only one IRA-to-IRA rollover is allowed in any 12-month period. A trustee-to-trustee transfer never touches the owner and can be done any number of times. An eligible distribution from an employer plan paid to the participant carries mandatory 20% federal withholding - which a direct rollover avoids.
IRA Rollovers vs. Transfers: a worked example
A $100,000 401(k) check paid to the participant arrives as $80,000; to roll over the full amount they must add $20,000 from other funds within 60 days.
More terms in Retirement Plans, Accounts & Trading
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
SEP IRA
An employer-funded IRA plan, up to 25% of compensation.
All Retirement Plans, Accounts & Trading terms · Full glossary