Direct vs Indirect Rollovers
In a direct rollover, your old plan or IRA pays the money straight to the new custodian, so nothing is withheld and there's no deadline for you to meet. In an indirect rollover, the money is paid to you and you must redeposit it within 60 days; if it comes from an employer plan, 20% is withheld first. For most people moving funds into precious metals, the direct route is simpler and carries less risk of a tax mistake.
The Two Routes Side by Side
| Question | Direct rollover | Indirect rollover |
|---|---|---|
| Who gets the check or wire? | The receiving custodian, for your benefit | You |
| Federal withholding from an employer plan | None | 20% mandatory |
| Deadline | None for you | 60 days from receipt |
| Once-per-year limit | Does not apply | Applies to IRA-to-IRA rollovers |
| Risk of an accidental taxable distribution | Low | Higher |
The IRS describes both methods on its rollovers page. When both accounts are IRAs, the direct version is called a trustee-to-trustee transfer.
How a Direct Rollover Works
You open the receiving account first, then tell the paying plan to send the distribution to it. The check is typically made payable to something like "[Custodian name], FBO [your name]," and may be mailed to you to forward or sent straight to the custodian. Either way, because it isn't payable to you, it remains a direct rollover. The plan reports it on Form 1099-R with a code showing a direct rollover, and it generally isn't taxable.
For moving money into metals, the direct route also means the cash lands in the self-directed IRA, ready to buy eligible coins or bars. Our trustee-to-trustee transfer guide covers the IRA version step by step.
How an Indirect Rollover Works
With an indirect rollover, you receive the distribution and then deposit it into an IRA or another plan within 60 days. Three complications follow:
1. The 20% withholding gap
Eligible rollover distributions from employer plans paid to you have 20% withheld for federal tax. To roll over the full amount, you replace the withheld 20% from other money. Example: a $60,000 distribution leaves you a $48,000 check. Deposit only $48,000 and the missing $12,000 is generally taxable income. Distributions from IRAs aren't subject to the mandatory 20%, but default withholding may apply unless you opt out. See tax withholding on rollovers.
2. The 60-day clock
Miss the deadline and the amount is generally treated as a distribution, taxable and potentially subject to the 10% additional tax if you are under the IRS-defined age in the early distribution rules. Waivers exist but are limited; see the 60-day rollover rule.
3. The one-per-year limit
You can do only one indirect IRA-to-IRA rollover in any 12-month period across all your IRAs. A second one can be treated as a taxable distribution and, if deposited, an excess contribution. See the one-rollover-per-year rule.
When Indirect Rollovers Come Up Anyway
Sometimes the money is already out before anyone thinks about a rollover: a plan cashed you out automatically, a check arrived in your name, or a loan offset occurred when you left a job. In those cases, the 60-day window (or the longer deadline for qualified plan loan offsets) is what lets you still roll the money over. Treat the date of receipt as the start of the clock and act on it promptly.
A Worked Comparison
Imagine two people leaving the same employer, each with $60,000 in pre-tax 401(k) money they plan to move into gold and silver.
Person A opens a self-directed IRA, gives the plan the custodian's instructions, and elects a direct rollover. The plan sends $60,000 to the custodian. Nothing is withheld, the 1099-R shows a direct rollover, and the full $60,000 is available to buy eligible metals.
Person B asks for a check. The plan withholds $12,000 and mails $48,000. Person B now has 60 days to open an account and deposit $60,000, which means finding $12,000 from savings. If only $48,000 is deposited, $12,000 is reported as a taxable distribution. Person B recovers the withholding only when filing taxes the following year.
Both people end up holding metals in an IRA, but Person B carried more risk, more paperwork, and a temporary cash shortfall along the way.
Choosing a Route for a Metals Purchase
A self-directed IRA custodian generally needs cash in the account before it can pay a dealer for metals. With a direct rollover, the cash arrives intact. With an indirect rollover, you carry the deposit risk, the withholding gap, and the deadline. That's why many people prefer the direct route; our list of common rollover mistakes shows how the indirect route tends to go wrong.
Goldco, a precious metals company, describes its IRA funding as transfers and rollovers handled through the self-directed custodian. Its precious metals specialists are not licensed to give tax advice, so ask your tax professional which route fits your situation. The Goldco rollover process page has details.
Frequently Asked Questions
Is a check made out to my new custodian still a direct rollover?
Yes, if it's payable to the custodian for your benefit, even if it's mailed to you to forward.
Can I get the withheld 20% back?
Withholding is credited against your tax when you file your return. If you replaced it and rolled over the full amount, you may receive it as part of a refund.
Do direct rollovers show up on my tax return?
Rollovers from employer plans are reported on Form 1099-R and on your return as a nontaxable rollover. Direct IRA-to-IRA transfers generally aren't reported.