When you chose to move funds from one retirement plan, such as an IRA or Keogh plan, it is called a direct transfer. You can also perform a direct transfer from one company plan to another, or move your money from a company plan to a personal plan.

During a direct transfer, you never handle the money. Your plan sponsor will send the funds directly to the new account, so you never have possession of the plan amounts. You are not limited to a specific number of times you can perform a direct transfer.

If at any point you come into possession of your money, even if you personally deposit them into a new account, this action is known as a rollover. You are only allotted one rollover per year for each retirement plan you have. You must utilize direct transfer method if you are moving money from a company plan to another IRA, otherwise you’ll be subject to a 20% tax withholding. The IRS considers you as the person making the rollover.