Rolling over an IRA allows you to transfer funds from your retirement account to an Individual Retirement Account (IRA) while maintaining those assets’ tax-deferred status.
There are two main types of IRA rollovers - direct and indirect - and it’s important to follow the Internal Revenue Service (IRS) rules to avoid taxes and penalties.
Direct rollover is the safest way to move assets from one retirement account to another, as funds are transferred without your participation.
If you choose to manage the funds yourself with an indirect transfer, the funds must be transferred to the new IRA within 60 days. Otherwise, you will be subject to taxes and fines.