In order to avoid income tax withholding and an early withdrawal penalty when moving retirement funds from one account to another you must

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Making a trustee-to-trustee rollover means that the money is transferred directly from one account to another without the account holder ever taking possession of the funds. This avoids both income tax withholding and an early withdrawal penalty. Option A (use a rollover IRA) is incorrect because it is a type of account, not a specific action to avoid taxes and penalties. Option C (take possession of the funds yourself before making the move) is incorrect because this would result in a taxable distribution and early withdrawal penalty. Option D (buy an annuity with the funds) may or may not result in taxes and penalties depending on the specific circumstances.

In Order to Avoid Income Tax Withholding and an Early