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Direct & Indirect Rollovers

Thinking about rolling your retirement assets from an employer retirement plan, such as a 401(k) or 403(b), to an IRA? A direct rollover or an indirect rollover to an IRA will keep your retirement assets tax-deferred. Thrivent Mutual Funds offers simple, flexible options for investing your retirement assets.

It’s important to consider your financial situation and to make an informed choice. Check out Making Sense of Rollovers and Transfers as you consider all your options when it comes to your retirement assets.

Direct Rollover

With a direct rollover, you never take possession of your retirement assets and no taxes are withheld. The current retirement plan administrator sends your retirement assets directly to your IRA, either electronically or issues a check payable to Thrivent Mutual Funds.

  • Retirement assets are sent directly from one institution to another
  • Generally, you don't take possession of the assets during the rollover, though it depends on your employer
  • No taxes are withheld from rollover amount
  • The 60-day rule and one-rollover-per-year rule do not apply

Indirect Rollover

You also have the option to request an indirect rollover. With this option, assets are first distributed to you, usually by a check, and you are responsible for sending the check to the receiving organization. However, in this case, the employer plan administrator must withhold 20% of the distribution towards any taxes you may owe. If distributions are from an IRA, tax withholding may be waived.   

  • Retirement assets are sent directly to you
  • You DO take possession of the assets during the rollover
  • 20% withholding mandatory for assets distributed from employer retirement plans to cover potential federal income tax
  • 10% withholding required (unless otherwise requested) for IRA distributions to cover potential federal income tax
  • If withholding occurs, you will need to use other funds to rollover the full amount of the distribution (amount you received plus the amount withheld). If you do not rollover the entire amount, the amount not rolled over is subject to income tax and possible early distribution penalties if you are under age 59 1/2
  • 60-day rule does apply
  • One-rollover-per-year rule applies to IRAs, but not to qualified employer plans

The 60-Day Rule

Generally, once you receive an IRA or retirement plan distribution, you have 60 calendar days to roll over your assets into another employer retirement plan or IRA to avoid paying potential taxes and penalties on your savings.

The One-Rollover-Per-Year Rule

Beginning January 1, 2015, each taxpayer can make ONE indirect rollover of assets from an IRA once in any 12-month period, no matter how many IRAs are owned. 

Consider Your Options

Keep in mind that when looking at moving your retirement assets it’s important to be informed, understand your own financial situation, and to consider all your options.  Whether that includes rolling your assets into an IRA or staying with your current employer-sponsored plan. Make sure you understand the pros and cons of each option and how it applies to your situation before you make a choice.  Finally, you may also want to talk things over with your tax-advisor.

Ready to begin? We can help you set up an account and complete the proper paperwork.