Final answer:
The strategies for moving a qualified profit sharing plan accumulation and retaining its status as 'qualified' money include establishing a conduit IRA or performing a direct transfer to the new employer's plan. Both these options avoid tax penalties and ensure the money remains qualified.
Step-by-step explanation:
To achieve the goal of moving the lump sum distribution of a qualified profit sharing plan to a new employer's profit sharing plan while maintaining its qualified status, certain strategies can be employed. An indirect rollover using an existing IRA might involve taking possession of the funds and then rolling them over within 60 days, which could lead to possible tax withholding and the risk of penalties if not completed in time. A direct rollover to an existing IRA is more streamlined, involving the transfer of funds directly from one trustee to another without the client taking possession, hence avoiding mandatory withholding and possible penalties.
Establishing a conduit IRA specifically serves as a temporary holding account with the intention of moving the money to another qualified plan, ensuring the money retains its qualified status. Lastly, a direct transfer to the new employer’s plan, also often referred to as a trustee-to-trustee transfer, is the most straightforward and secure strategy, as it involves the direct movement of funds from one qualified plan directly into another without the risk of penalties or taxes.
Considering the strategies that both maintain the qualified status of the funds and avoid unnecessary tax implications, the successful and compliant options are to establish and use a conduit IRA or to do a direct transfer to the new employer's plan.