What is a rollover in the context of IRAs?

In the context of IRAs, a rollover refers to taking possession of account funds temporarily during the transfer from one retirement account to another. This process allows individuals to move their retirement savings from one provider to another without incurring tax penalties, as long as the funds are re-deposited into another qualifying retirement account within 60 days.

When a rollover occurs, the account holder can physically receive the funds or have them sent to them in the form of a check. However, it is essential to complete the rollover within the specified time frame to avoid taxation and penalties. While other options mention aspects of IRAs, such as direct transfers and conversions, they do not accurately capture the essence of what a rollover entails in this specific context.

Thus, understanding that a rollover involves taking temporary possession of account funds helps clarify the mechanics involved in moving assets between retirement accounts while adhering to IRS regulations.