To avoid income tax withholding on funds being transferred into a rollover IRA,the payment must be made directly to the employee.

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To avoid income tax withholding on funds being transferred into a rollover IRA, the payment must be made directly from the current retirement account (e.g., 401(k)) to the new IRA account, not to the employee. This is known as a direct rollover.

To Avoid Income Tax Withholding on Funds Being Transferred into a Rollover