Rollover

When you transfer (or “roll over”) money from a 401(k) account to an IRA. This allows you to keep the tax-deferral benefits of a 401(k) when you change jobs or retire. You don’t pay any taxes on the money that is transferred, and your money continues to grow tax-free. To avoid a 20% tax withholding penalty, the rollover must take place directly from one custodian to another.