Question

James received a distribution of assets from a qualified retirement plan on June 8, 2016. The gross distribution totaled $58,550. James deposited the funds into a money market account. On July 22, 2016, James made a $58,550 contribution to a traditional IRA. This transaction is a/an ______.

Direct rollover.

Indirect rollover.

Trustee-to-trustee transfer.

Tax-free distribution.

Answer 1

solution :

the transaction is an indirect rollover

Indirect rollover.:

An indirect rollover is a method of transferring assets from a tax-deferred 401(k) plan to a traditional individual retirement account (IRA). With this method, the funds are given to the employee via check to be deposited into their own personal account.

the other terms are defined as

Direct rollover:

The Direct Rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan, including an IRA. The contribution to the IRA is called a rollover contribution.

Trustee-to-trustee transfer:

With a direct transfer — also called a trustee-to-trustee transfer — the funds move directly from one IRA to another without the client's touching the money. Directtransfers can be done as often as a client wishes, without having to worry about the one-a-year IRA rollover rule.

Tax-free distribution:Dividend distribution tax. From Wikipedia, the free encyclopedia. Dividenddistribution tax is the tax imposed by the Indian Government on companies according to the dividend paid to a company's investors. At present, the dividenddistribution tax is 15% on the gross amount of dividend as per Section 115O.