When an individual changes employers, it is very common for the individual to want to move his or her retirement plan contributions from the prior employer’s plan to the new employer’s plan. To allow for this, most 401(k) plans allow participants to make rollover contributions to the plan.
A rollover contribution may be in the form of a direct rollover from the prior employer’s plan or from an interim IRA, or it may be in the form of an indirect rollover from the prior employer’s plan to the participant and then from the participant to the new employer’s plan. In the event of an indirect rollover, the participant has already received the distribution check from the prior plan, and the participant has 60 days to decide to contribute the distribution to the new employer’s plan as a rollover contribution.
Caution! Now Expired
IMPORTANT: In response to the COVID-19 crisis, the IRS has extended the 60-day deadline in certain limited circumstances. Specifically, if the sixty-day rollover period would otherwise end on or after April 1, 2020, and before July 15, 2020, then the 60-day deadline in which to complete the rollover is extended until July 15, 2020.
The new employer’s plan will provide whether an employee has to meet the plan’s participation requirements before making a rollover contribution and how the rollover amounts will be accounted for under the plan.
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