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Livids-Pomegranate OP t1_j6ohq7w wrote

Reply to comment by Werewolfdad in Trad to Roth IRA-Didn’t know it was a one time rollover by Livids-Pomegranate

Do you mind explaining the difference of indirect IRA to IRA vs Trad to Roth? I was under the impression I’ve been doing Traditional IRA to Roth IRA but don’t understand the indirect concept

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Werewolfdad t1_j6ohx7z wrote

> indirect IRA to IRA

Your IRA custodian mails you a check made out to you. You deposit that check at a new IRA custodian.

Requires forms

> Trad to Roth?

Your current custodian moves money from your tIRA to your Roth IRA. You don't get a check

Usually just requires a click of a few buttons on the website

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Livids-Pomegranate OP t1_j6oibta wrote

Ok thank you! Sounds like I was just told the incorrect info. appreciate the help!

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Ruminant t1_j6ojlts wrote

An indirect rollover is when you take possession of the money outside of a retirement account in between moving it from one custodian to another.

For example: you withdraw the money from your IRA to a bank account, then send that money to a different IRA. Or maybe you get a check that is payable to you, which counts as you "taking possession" even if you pass it to the new IRA rather than cashing it yourself.

This is different from a direct rollover. There are no limits on direct rollovers. A direct rollover could be:

  • An "in kind" rollover, where the actual securities owned in your first IRA are transferred directly into the second IRA.
  • Your old IRA provider sends you a check made payable to the new IRA provider. For example, "TO: Fidelity Investments FBO Livids-Pomegranate" (FBO means "For the Benefit Of").

A Roth conversion is another type of "direct" transfer between IRAs, and as such is also not subject to the once-per-12-months rule.

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