The direct IRA rollover option is also referred to as a trustee-to-trustee transfer or direct transfer, and occurs when the IRA assets are paid directly from one IRA custodian to a successor custodian, for the benefit of your IRA. In general this is the better option, for reasons which include:
- You can use this method to move your assets between your IRAs as often as you choose.
- The direct transfer is not a taxable event. It is reported to the IRS as a direct rollover, and you will receive a 1099 code G in the year following your rollover showing the direct transfer. However, the rollover is not reported to you as income and should not be reported as such, on your tax-return. This means less paperwork to deal with when it is time to file your taxes.
If you are moving assets from another financial institution to us under the direct rollover option, you should ensure that your IRA is opened with Guideline, before the rollover of IRA funds is initiated.