Life · Chapter 11 · Rollovers & Distributions
Rollovers & Direct Transfers
Definition
Moving qualified-plan or IRA money to an IRA tax-free. Requirements: reinvest within 60 days; amount unlimited. If a distribution from an employer plan (401(k), 403(b), governmental 457(b)) is paid to the participant, the plan MUST withhold 20% — and the participant must make up the shortfall out of pocket or that 20% is taxed (+ possible penalty). A direct rollover (plan → IRA) or a trustee-to-trustee transfer (IRA → IRA) — funds never in the owner's control — avoids the withholding entirely. IRA distributions taken personally carry only 10% default withholding, which the owner may waive.
Exam tip
One IRA-to-IRA rollover per 12 months per TAXPAYER — aggregated across every IRA you own, not one per account. NOT limited: trustee-to-trustee transfers, traditional→Roth conversions, and plan↔IRA rollovers. RMDs and excess contributions can NEVER be rolled over. A surviving spouse is the only non-owner who can roll inherited funds into their own IRA.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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