What Is a Rollover of Retirement Funds?

By Kristi Waterworth – Updated Jun 6, 2025 at 1:59 PM EST | Fact-checked by Frank Bass

Key Points

Rollovers transfer retirement funds between accounts, avoiding taxes and penalties.
Direct rollovers are common for their simplicity; funds move between institutions directly.
ROBS rollovers allow investing retirement funds in start-ups, requiring expert guidance.

If you change jobs, it's very likely you'll need to roll over your retirement funds, but just what does that mean? We'll cover what that includes, the different types of rollovers, and a few key things you need to know before you roll over your funds.

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The words Retirement Plan, IRA, and other retirement related words written on graph paper. — Image source: Getty Images.

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Direct rollover

Most people choose a direct rollover due to the simplicity of the process. In a direct rollover, you simply arrange for the funds from the retirement account you wish to roll over to go to the institution or employer plan where you intend to hold them. These financial companies then communicate with each other and directly transfer money from one to the other, effectively removing you from the process.

Indirect rollover

An indirect rollover is what happens when you request that your funds be sent to you in the form of a check. You're then presumed to be opening a rollover account with the money. However, not everyone does, or at least they don't in a timely manner. If you're rolling over from a 401(k), you have only 60 days to deposit the check elsewhere; otherwise, major penalties and taxes may come into play.

Rollover for business start-ups

A third option now exists, allowing you to roll over into your own start-up, known as a Rollover as Business Start-ups (ROBS). This can be a tricky transaction to pull off, and you'll need help from a professional to ensure you don't end up losing a lot of money to penalties. When properly executed, however, a ROBS transaction can fund your new venture, which may provide more retirement income than an IRA could.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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