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That is why you work with a good brokerage so that direct roller take place between the former employer and the brokerage. In the meanwhile the customer never touch the 401(K) fund to avoid triggering several tax events.
Fidelity has helped to make these rollover transfer easily especially when their offices are widely available in large cities. They handled all paperwork, funds were wired and the rollover account set up within 2 weeks. Schwab also have many offices and should do equally as well.
In contrast, what I've seen happen with a bad firm is that, against instructions, it withheld state income taxes on a direct rollover. It then compounded the problem by failing to withhold 20% for federal taxes on the money it sent to the state (i.e. on money that was not rolled over). TIAA did this (in a relative's account).
Fortunately, I found out about this in time and instructed my relative to contribute the shortfall to the IRA as an indirect rollover. (Since this was a 403(b) to IRA rollover, it would not have been constrained by the once per year rule, though that didn't matter here.)
Hi @msf You noted: "(Since this was a 403(b) to IRA rollover, it would not have been constrained by the once per year rule, though that didn't matter here.)"
From working with a friend a few years ago, this is my understanding related to what you wrote: IRA one-rollover-per-year rule Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own. The one-per year limit does not apply to: rollovers from traditional IRAs to Roth IRAs (conversions)Jun 18, 2019
My understanding of what your note is not: Example:
If one had several life time jobs, that resulted in 2, 401k's and 2, 403b's; this person could perform direct transfers/rollovers of these accounts into an existing traditional IRA without violation of the once-per-year rule.
As I understand, the once-per-year rule applies only to traditional IRA's, YES ???
You'll find the info in Pub 590A (gotta dash now), but the gist is that the rule applies to T-IRA to T-IRA and to Roth IRA to Roth IRA. You're allowed only one 60 day rollover of both these types combined (i.e. one T to T, or one Roth to Roth, but not one of each). That surprised me when I looked it up.
Here's the Pub 590A cite (very similar to what you wrote):
Application of one-rollover-per-year limitation. You can make only one rollover from an IRA to another (or the same) IRA in any 1-year period regardless of the number of IRAs you own. The limit will apply by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. However, trustee-to-trustee transfers between IRAs aren’t limited and rollovers from traditional IRAs to Roth IRAs (conversions) aren’t limited.
Comments
Fidelity has helped to make these rollover transfer easily especially when their offices are widely available in large cities. They handled all paperwork, funds were wired and the rollover account set up within 2 weeks. Schwab also have many offices and should do equally as well.
Fortunately, I found out about this in time and instructed my relative to contribute the shortfall to the IRA as an indirect rollover. (Since this was a 403(b) to IRA rollover, it would not have been constrained by the once per year rule, though that didn't matter here.)
You noted: "(Since this was a 403(b) to IRA rollover, it would not have been constrained by the once per year rule, though that didn't matter here.)"
From working with a friend a few years ago, this is my understanding related to what you wrote:
IRA one-rollover-per-year rule
Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own. The one-per year limit does not apply to: rollovers from traditional IRAs to Roth IRAs (conversions)Jun 18, 2019
My understanding of what your note is not: Example:
If one had several life time jobs, that resulted in 2, 401k's and 2, 403b's; this person could perform direct transfers/rollovers of these accounts into an existing traditional IRA without violation of the once-per-year rule.
As I understand, the once-per-year rule applies only to traditional IRA's, YES ???
Thank you for your clarification.
Take care,Catch
Thank you.