IRA IRA Rollovers and Transfers

Question 1

What is the key difference between a direct IRA transfer and a 60-day rollover?

Accepted Answer

In a direct transfer, funds move directly between institutions; in a rollover, the account holder receives the funds then re-deposits them

Answer

A transfer is taxable; a rollover is not

Answer

A rollover requires IRS approval; a transfer does not

Answer

Transfers are limited to once per year; rollovers are not

Question 2

How many times per year can an individual perform an indirect (60-day) IRA-to-IRA rollover?

Accepted Answer

Once per year across all IRAs

Answer

Unlimited

Answer

Once per IRA account

Answer

Twice per year

Question 3

When rolling over a 401(k) to a traditional IRA, how much mandatory withholding applies to a lump-sum distribution?

Accepted Answer

20%

Answer

0%

Answer

10%

Answer

25%

Question 4

What must the account holder do if 20% was withheld from a 401(k) distribution they intend to roll over to an IRA?

Accepted Answer

They must deposit the full pre-withholding amount using other funds within 60 days to avoid tax on the withheld portion

Answer

The rollover is automatically reduced by 20%

Answer

They must file Form 8606 to reclaim the withheld amount

Answer

Nothing; the withholding automatically transfers to the IRA

Question 5

Can a Roth 401(k) be rolled over directly into a Roth IRA?

Accepted Answer

Yes, and no taxes are owed on a qualified direct rollover

Answer

No, they are different account types

Answer

Yes, but only the earnings portion is taxable

Answer

Only if the Roth IRA is at least 5 years old

Question 6

Which type of distribution from an IRA is NOT eligible to be rolled over?

Accepted Answer

A required minimum distribution (RMD)

Answer

A lump-sum distribution from a traditional IRA

Answer

A rollover from a prior employer's 401(k)

Answer

A distribution from an inherited IRA to a spouse beneficiary