What's the Difference Between an IRA Rollover and an IRA Transfer?

Both an IRA rollover and an IRA transfer move money from one retirement account to another, but they work differently and have different rules. A direct transfer moves money straight from one IRA to another without the account holder ever receiving the funds — there's no tax withholding, no 60-day deadline, and you can do as many transfers as you like in a year. A rollover involves you receiving a distribution from one retirement account and then depositing it into another within 60 days to avoid taxes and penalties. With an indirect rollover, your old IRA custodian may withhold 20% for taxes, which you'd need to replace out of pocket when making the new deposit. You're also limited to one rollover per 12-month period across all your IRAs, so a direct transfer is often the simpler and safer choice when moving retirement funds.