Learning about my rollover options

Did you know that some of your previous retirement accounts can be rolled over to your Guideline 401(k) through either a direct or an indirect rollover? This article outlines the differences between these two methods to help you decide which is best for you.

With a direct rollover, your previous provider distributes your assets by paying them directly into your Guideline 401(k) account. A direct rollover is often preferred as there are no potential taxes with this option. There are also no limits to the number of times you can do a direct rollover during a year. See this article to learn more about rolling over your retirement account to Guideline via a direct rollover.

An alternative method of consolidating your funds into Guideline is via an indirect rollover. With an indirect rollover, your previous custodian sends your assets directly to you. The custodian withholds the 20% mandatory federal taxes and any applicable state taxes from the distribution. You would then be responsible for depositing the entire amount, including any taxes withheld, into your new retirement account at Guideline within 60 days of the distribution date to avoid a taxable event. Additionally, you are only allowed to make an indirect rollover between providers one time per year. If you do miss the 60-day rollover deadline, see our Tax Notice here for more information on options that may be available to you.

Though we don’t recommend an indirect rollover, some people use the 60-day window as a short-term loan of their retirement assets. If the full amount is not deposited to the new custodian within 60 days, however, any amounts not rolled over will be deemed distributed and taxable and may be subject to early withdrawal penalties. The 60-day time frame is strictly enforced so you don’t want to miss it.

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