Old 401(k) Rollovers Into a Self-Directed IRA Avoid Penalties When Done Directly
SIOUX FALLS, S.D. – September 24, 2026 – Rolling over an old 401(k) into a Self-Directed IRA is simple on paper but easy to get wrong in practice, since an indirect rollover triggers mandatory 20 percent withholding and a 60-day deadline to replace it out of pocket; IRA Financial moves funds directly from the old plan into the new IRA so neither issue ever comes up.
The IRS requires a 401(k) plan to withhold 20 percent for taxes on any distribution paid straight to the account holder, even when the money is meant to be rolled over. The investor then has 60 days to deposit the full original balance, withheld portion included, into the new account, or the IRS treats whatever wasn’t replaced as an early withdrawal, taxable as income and subject to a 10 percent penalty for anyone under 59 and a half. A direct, trustee-to-trustee rollover skips all of that: the old plan sends the funds straight to the new custodian, nothing is withheld, and there is no 60-day clock to watch.
Tax attorney Adam Bergman founded IRA Financial in 2010 after discovering how much more flexibility the tax code allows inside an IRA than most custodians let on, and moving old retirement accounts over correctly has been part of the business since day one. Clients typically roll over an old 401(k) or IRA into a Self-Directed IRA as the first step before making their first alternative investment, the same starting point behind stories like Marcus, who grew a Self-Directed IRA from $35,000 in Bitcoin into $25 million.
The size of the balance also matters more than most people expect once it lands somewhere new. Custodians that charge a percentage of assets take a bigger cut every year the account grows, while IRA Financial’s flat $495 annual fee stays the same whether the rollover is $50,000 or $5 million.
“The 20 percent withholding is the part that blindsides people,” said Adam Bergman, Esq., founder of IRA Financial. “They roll over $200,000, expect all of it to land in the new account, and $40,000 is missing because the old plan already sent it to the IRS. A direct rollover means that never happens in the first place.”
Investors can open a Self-Directed IRA at irafinancial.com starting at $495 a year, with no setup fee and no charge that grows with the size of the rollover. IRA Financial’s team coordinates directly with the old plan administrator so the transfer is handled as a trustee-to-trustee rollover from the start.
About IRA Financial
IRA Financial is a Self-Directed IRA and Solo 401(k) provider founded in 2010 by tax attorney Adam Bergman, who started the company after discovering how much flexibility the tax code allows retirement investors that most custodians never mention. Its mission is to give investors direct control over their own retirement savings, opening the door to real estate, private equity, cryptocurrency, and other alternative assets that traditional brokerage IRAs don’t offer. IRA Financial now serves more than 27,000 clients nationwide with over $8 billion in assets under administration, a 97% client retention rate, and an in-house team of tax and ERISA specialists. Learn more at irafinancial.com.
Media Contact
Company Name: IRA Financial
Contact Person: Tony Unkel
Email: Send Email
Address:5109 S Broadband Ln
City: Sioux Falls
State: SD
Country: United States
Website: https://www.irafinancial.com/
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