Why this is correct (Q9 — avoid immediate taxes & withholding via direct rollover): The principle advantage of a direct rollover is that the plan-to-plan transfer prevents the payment being treated as a taxable distribution. If you cash out instead, the plan may be required to withhold taxes (for example, mandatory federal withholding on certain distributions), and the distribution becomes taxable income that year unless you complete a timely rollover. A direct rollover thus preserves the tax-advantaged status and avoids withholding and the administrative burden of replacing withheld amounts. This is why advisors frequently recommend direct rollovers to preserve retirement savings when changing jobs.

Practical takeaway & steps to implement: When moving plans, instruct the old plan to send funds directly to the receiving custodian. Confirm whether the new account accepts trustee-to-trustee transfers and whether any paperwork or account setup must be completed first. If you must do an indirect rollover (rarely recommended), be aware of strict timing rules and withholding consequences. Keeping the funds tax-advantaged reduces the likelihood of surprise tax bills and keeps compound growth working for you.