When it comes to IRAs, there are two different ways to rollover your assets between different IRA accounts. The first is what’s known as a transfer, or direct rollover. In this rollover process, one financial institution sends a request to the other for a transfer and the disbursing institution sends a check in return. Because the funds are never transferred to the IRA account holder, the process is not considered to be taxable by the IRS.
The second form of rollover is known as an indirect rollover, or a 60 day rollover. In this case, the original financial institution makes out a check directly to the IRA holder, who must then deposit this IRA rollover contribution into the receiving institution within 60 days. If this deadline of IRA rollover isn’t met, the funds will lose their status as IRA funds, meaning that they may be taxed as ordinary income and subject to additional penalties. Continue reading