Direct Rollover

Definition of "Direct rollover"

Eligible rollover distribution that is paid directly from an employee's employee benefit insurance plan to the employee's individual retirement account (IRA) or to another plan maintained by the employer that accepts rollovers. Under such a rollover, the employee is not taxed on any part of the distribution until it is withdrawn from the IRA or the employer-maintained plan. The employee can open an IRA to receive the distribution. If an employee is employed by a new employer who maintains an employee benefit insurance plan that accepts rollovers, the distribution can be placed directly into that plan. If the new employer does not accept rollovers, the employee can place the distribution into an IRA.

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