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| Key Rollover Considerations |
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If you choose to move assets from your company's retirement plan to an IRA or another company's plan, you can typically roll over the full value of your account, less any loans (some plans do permit a rollover of loans) and after-tax contributions you previously made. After 2001, employer after-tax contributions may be rolled over into an IRA. Speak with a human resources representative at your previous employer to learn the exact amount that you can roll over.
Direct Rollover
By initiating a direct rollover, or "trustee-to-trustee" transfer, you are instructing your previous employer to make your distribution payable to the new IRA custodian or retirement plan. Since the money is sent directly to the appropriate party, it is not subject to current income tax—100% of your money is rolled over and continues to compound on a tax-deferred basis.
Indirect Rollover
With an indirect rollover, your previous employer makes the distribution payable to you, less 20% that is withheld for taxes. You then have just 60 days to roll the money over to your new IRA or retirement plan. To make a full rollover you must personally deposit the 20% amount that was withheld from your distribution. Otherwise, the IRS will consider that portion to be a distribution, and you'll have to pay taxes, plus the 10% early withdrawal penalty (if you're under age 59½) on that amount.
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