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Have the rollover check made payable to the new custodian, not to you, usually written with FBO (for benefit of) and your name. That wording keeps it a direct rollover and avoids the mandatory withholding that hits distributions paid to you. Mail it by Certified Mail to the custodian's rollover address, keep copies, and call the custodian about a week later to confirm it landed.
One honest caveat before the how-to: LetterAgent prints and mails letters, but it cannot enclose a physical check. A rollover check is a mail-it-yourself job, and the steps below show how to do it safely.
This is general information, not tax advice.
| Direct rollover | Indirect rollover | |
|---|---|---|
| Check payable to | The new custodian (FBO you) | You personally |
| Tax withholding | None | Twenty percent on employer-plan distributions |
| Deadline | No fixed clock, but mail it promptly | Sixty days from the day you receive the money |
| Paperwork burden | The custodians handle most of it | You must replace the withheld amount from your own funds |
To the new custodian, with your name attached as the beneficiary: "[New Custodian] FBO [Your Name]." FBO means "for benefit of." This wording is what makes the move a direct rollover in the IRS's eyes even when the check passes through your hands on its way to the new account. Many custodians mail the check to you rather than custodian-to-custodian, so don't be surprised when a five-figure check shows up at your door made out to someone else. That is the correct setup.
The wording matters because of what happens when a distribution is paid to you personally. On an indirect rollover from an employer plan, the plan administrator must withhold a flat share for federal taxes, twenty percent, and hand you the rest. You can still complete the rollover, but only if you come up with the withheld amount from your own pocket and deposit the full original sum within sixty days. A check made out to the custodian skips the withholding entirely, which is why the direct route is the default recommendation.
Keep it to exactly what the new custodian asked for:
USPS Certified Mail with a return receipt is the standard advice for anything this valuable, and it fits here: you get tracking plus signed proof the custodian received it. For very large amounts, Registered Mail is the slower, more secure step up, with a chain of custody at every handoff. Use the custodian's rollover or retirement-contributions address, which is often different from the address printed on your statements. Send it flat in a rigid mailer so the check never folds, and keep the mailing receipt with the tracking number until the money is confirmed in the new account.
Track the delivery and write down the date it arrived. A few days later, call the new custodian and ask for confirmation that the rollover was booked: which account, what date, what amount. Get the representative's name while you're at it. Keep the tracking receipt, the delivery confirmation, and copies of the check and forms with that year's tax records. The old plan will issue a 1099-R for the distribution, and your return has to show the rollover correctly or the IRS will treat it as a taxable payout. And if you took the indirect route, remember the sixty-day clock runs from the day you received the distribution, not the day you mailed the check, so work backward and leave yourself a buffer.
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