Direct Transfer

Description and Definition of Direct Transfer

A method of moving funds directly from one retirement plan to another. With a direct transfer, you order one sponsor to transfer the funds directly to the other sponsor – you do not take possession of the funds. There is no limit on the number of times you can move your money via direct transfer. The direct transfer method must be used to move funds from a company retirement plan to an IRA, otherwise 20% of the money withdrawn from the company plan will be withheld and paid to the IRS, even if no taxes are due.

Resources

See Also

Further Reading

• Direct Transfer in the West's Tax Law Dictionary
• Direct Transfer in “A Dictionary of Taxation”