If you are to receive assets from a qualified employer-sponsored plan, you may continue to defer income taxes by executing what is known as a direct rollover to an IRA. In general, any other distribution from a qualified employer-sponsored retirement plan is subject to an immediate 20% income tax withholding requirement. Once in the IRA, the assets (along with earnings and growth) continue to be sheltered from recognition as ordinary (taxable) income until they are distributed.

Any comments regarding tax implications are informational only. Scott & Stringfellow does not provide tax or legal advice. As always, you should consult your tax or legal advisor.