A direct transfer of funds from a qualified retirement plan to an IRA is subject to the withholding rules.

Question

Quizplus · Accepted Answer

Direct transfer of funds from a qualified retirement plan to an IRA is not subject to withholding rules. However, if the distribution is made to the account owner instead of being transferred directly to the IRA, the plan administrator is required to withhold 20% of the amount as a prepayment of taxes.

A Direct Transfer of Funds from a Qualified Retirement Plan