Direct Rollover vs Indirect Rollover
The definition of a rollover is when money is moved from one type of retirement account to a different type of retirement account. The two options available to you are a direct or indirect rollover. But what are the differences between these? A direct rollover is simpler than an indirect rollover since it has no tax implications from the IRS. It should be as easy as filling out the correct paperwork to get the money transferred into the new account. An i ndirect rollover is a little more complicated since it might have tax implications from the IRS. Through an indirect rollover, the administrator of your retirement account will cash out your account and send you a check. The check will withhold either 10% or 20% depending on the type of retirement account you participated in. This example will provide a better understanding of both choices. Let’s say you terminate your employment with Company A and start a new job with Company B. You had a 401(k) with Company A and...