From
Your Perspective:
Managing your retirement nest egg
Handling a rollover
If you’re rolling over assets from your retirement savings plan into an
IRA
or
immediate annuity,
you can handle the move either of two ways:
You can
request that your account be transferred directly
to your new trustee.
You can
have a check made out to you and handle the transfer
yourself.
The direct transfer is cleaner. Your only
responsibility is providing the account number of the
rollover
IRA
— which you may open for the occasion or which may already
hold other rollover assets.
With an indirect transfer, you have 60 days
from the day the check is mailed to you to deposit the money
in your rollover IRA. You may do anything you want with the
money during that time as long as you don’t miss the deadline.
If you do, you’ve taken a
lump-sum distribution
whether you
wanted to or not — and the status of that money is no
longer
tax deferred.
One drawback of a direct transfer is that it may take several weeks, or even longer, for the transfer to be completed. Your account is frozen during that period, so you can’t buy or sell securities.
