A tax-free transfer of funds from a retirement plan into an IRA.  This can take the form of a direct transfer,  by which the custodian of the distributing account sends the funds directly to the IRA custodian or writes them a check,  or by a 60-day rollover,  by which the custodian distributes the fund to the account holder,  who can deposit all or a portion of it into an IRA within 60 days.  IRA Rollover rules apply.


IRA rollovers can be useful in many situations.  IRAs generally have more investment options than employer retirement plans.  Some employer plans do not offer Roth options, and by rolling to an IRA, a Roth conversion becomes possible.   Care should be taken for employees who retire after age 55, but who are not yet 59.5.  Often, 401(K) have an early retirement provision which allows for withdrawals without penalty before age 59.5; but If the funds are rolled into an IRA,  the funds will be subject to a 10% penality if withdrawn before age 59.5.