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Email Guidance – Direct Rollovers

Posted by James M. Carlson
Mar 06 2019

Q-1 I have two questions regarding Direct Rollovers:

  1. Does a Direct Rollover count towards the one Rollover in a 12-month period? I wasn't sure how that worked since the check is actually made payable to the bank FBO of the customer
  2. If an employer completes their own Direct Rollover form, which the customer signs, would we need to complete our Rollover form?

A-1 Your rollover or direct rollover questions are very timely and perceptive.

Neither the 60 day rule nor the once per year rule apply to any direct rollover from a pension plan into an IRA. The once per year rule applies only for IRA to person to IRA transactions. It does not apply to distributions from a pension plan.

A pension plan must furnish a special distribution form to the individual. It is called a section 402(f) form or notice. One of the options for the individual is to complete the form to instruct that she or he is doing a direct rollover to their traditional IRA or their Roth IRA. If your client will furnish you a complete copy of that distribution form, including the portion where they instruct to do the direct rollover, then the bank does not need this person to complete a rollover certification form. Although completion of the rollover certification form is "extra" insurance if you would obtain it as the form informs the person that he or she assumes responsibility if for some reason the distribution would be found ineligible to be directly rolled over.

Categories: Email Guidance