Glossary
Rollover
A rollover is the movement of retirement money from one tax-advantaged account to another — most commonly from a former employer's 401(k) into an IRA or a new employer's plan — without triggering taxes when done correctly.
The clean method is a direct (trustee-to-trustee) transfer, where the money never touches the owner's hands. An indirect rollover — a check to the owner — starts a 60-day clock and mandatory 20% withholding from employer plans, a combination that regularly produces accidental taxable distributions.
Why it matters in practice
A job change is when retirement money is most at risk of damage: cashing out small balances, missed deadlines, or moving into higher-cost products. The real decision has four options — leave it, roll to the new plan, roll to an IRA, or cash out — each with different costs, protections, and investment menus, and the right answer varies. Our guide to the decision: 401(k) rollovers.
Related terms: IRA (Individual Retirement Account) · 401(k) · In-Service Distribution · Net Unrealized Appreciation · Traditional IRA