"Avoiding the withholding trap is easy, just move the money from your retirement account to the traditional IRA as a "trustee-to-trustee" or direct transfer. If the retirement plan writes a check in your name it will be subject to mandatory withholding. Your employer's retirement plan is required to provide you with a direct transfer option. Here's how that is discussed in IRS Publication 590, "

"Before making an eligible rollover distribution, the administrator of a qualified employer plan must provide you with a written explanation. It must tell you about all of the following:"

"Your right to have the distribution paid tax free, directly to a traditional IRA or another eligible retirement plan. "

"The requirement to withhold tax from the distribution if it is not paid directly to a traditional IRA or another eligible retirement plan. "

"The tax treatment of any part of the distribution that you roll over to a traditional IRA or another eligible retirement plan within 60 days after you receive the distribution. "

"Other qualified employer plan rules, if they apply, including those for lump-sum distributions, alternate payees and cash or deferred arrangements. "

"How the plan receiving the distribution differs from the plan making the distribution in its restrictions and tax consequences. "

"It's easy enough to find an account provider that will charge low or no annual fees. While fees are important, decide how you want to invest the money first and then look at economical places to hold the account."

"Scottrade, for example, offers a no-fee IRA brokerage account with no set-up fees, no annual fees and no termination fees. An IRA that is a bank account is likely to have low or no annual fees. Mutual-fund families often waive annual fees once an account/investment relationship attains a certain dollar value. Don't let a $30 annual account fee determine where you're going to hold your money."

"In general, you can chose between
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