A direct rollover is a trustee-to-trustee transfer from one qualified retirement plan to another (or to an IRA) with no money paid to you. Because the funds never pass through your hands, there’s no 20% mandatory withholding and no risk of missing the 60-day window. For many savers moving an old workplace plan, a direct rollover is the cleanest way to preserve tax deferral and keep retirement on track.

Common examples include moving a former employer’s 401(k), 403(b), 457(b), or TSP into an IRA—or rolling those dollars into an annuity designed for guaranteed income. If you’re evaluating annuity options for a rollover, start with our guides on best annuities for 401(k) rollovers and the step-by-step process to roll over a 403(b) or 401(k) into a guaranteed annuity.

Direct vs. Indirect Rollover (Why It Matters)

• Direct rollover: Plan administrator or IRA/annuity carrier sends funds directly to the receiving trustee. No 20% mandatory withholding. Preserves tax deferral automatically.
• Indirect rollover: Distribution is sent to you first. Your plan withholds 20% for taxes; you must redeposit the full amount (including the 20% from other funds) within 60 days. Miss it and the distribution may be taxable (and penalized if under 59½).

Most retirees and job changers choose direct rollovers to avoid timing risks and unnecessary tax withholding.

Where Can You Roll Funds?

Qualified plan dollars can typically be rolled into:

• Traditional IRA (maintains pre-tax status)
• IRA annuity — learn the basics in What Is an IRA Annuity?
• Another employer plan that accepts roll-ins
• QLAC (inside an IRA) to defer income farther into retirement: What is a QLAC?

If you’re prioritizing guaranteed paychecks later, compare options like annuities with the highest guaranteed payout, or consider laddering annuities to balance rates and liquidity.

Direct Rollover to an Annuity: Why Many Do It

Moving qualified funds into a fixed or fixed indexed annuity can turn market-exposed dollars into protected, contract-backed guarantees with lifetime income options. Start with current yields on our current annuity rates page or drill down by category:

• Current fixed annuity rates
• Current income annuity rates
• Best FIAs with lifetime income riders

Need a primer first? See What is a Fixed Annuity?, What is a Fixed Indexed Annuity?, and how FIAs protect against market downturns.

Key Rules to Know Before You Roll

• RMDs can’t be rolled over. Once you hit your required beginning date, required minimum distributions must be withdrawn, not transferred. Get clarity with RMDs after SECURE 2.0 and whether annuitization satisfies RMDs.
• IRA “60-day / 1-per-12-months” rule (indirect rollovers only). Another reason to prefer a direct rollover.
• Roth conversions are separate. You can roll traditional plan dollars to a traditional IRA, then evaluate a conversion strategy—see Roth Conversions and using a bonus annuity with conversions.
• Mind product features and exit costs. If you later move from one annuity to another, review surrender charges and MVAs; bonus products (best upfront bonus annuity) can sometimes offset these.

When a Direct Rollover Makes the Most Sense

• Leaving a job or retiring: Consolidate scattered plans into one IRA or IRA annuity; coordinate with a pre-retirement checklist.
• Market-volatility fatigue: Shift a portion into guarantees—compare fixed annuity rates and short-term options.
• Income planning: Design a paycheck for life. Start with our income annuity calculator and explore lifetime income options.
• Inflation protection needs: Consider inflation-aware annuities or FIAs with COLA-style features.

Direct Rollover vs. Roth Conversion (and Why Some Do Both)

A direct rollover preserves tax deferral (pre-tax → pre-tax). A Roth conversion is a taxable event that moves pre-tax dollars into a Roth for tax-free growth. Many retirees roll to an IRA (or annuity within an IRA) first, then build a multi-year conversion plan: see Roth conversion windows and tax-deferred annuity strategies.

Designing the Income After You Roll

Once assets are in your IRA/annuity, you control the “when and how” of payouts. Explore:

• Highest guaranteed payout options
• How payout choices affect income
• Annuitization vs. income riders

Want a quick reality check? See what various balances can generate today: $500k, $750k, $1M, $2M.

Step-by-Step: How to Execute a Direct Rollover

1. Choose the destination. Traditional IRA or IRA annuity? Compare carriers and yields on current annuity rates.
2. Open the receiving account. If moving to an annuity, complete app and suitability forms (what is annuity suitability?).
3. Request a direct rollover. The receiving custodian typically initiates the trustee-to-trustee transfer.
4. Confirm assets and invest. Allocate to fixed, indexed, or income strategies (see lifetime income riders and index crediting methods).
5. Coordinate RMDs and taxes. Align withdrawals with SECURE 2.0 rules, QCDs (QCD guide), and your overall plan.

Advanced Planning Considerations

• Early retirement needs? If you must access funds before 59½, review 72(t) distributions and whether an income annuity could bridge the gap.
• Inflation & longevity risk: Protect against both with inflation-protected annuities or FIAs with lifetime income riders.
• Tax management: Coordinate withdrawals with tax-deferred annuity strategies and post-retirement conversions.
• Spousal planning: Consider joint-life income structures.