What's the difference between a direct vs. an indirect rollover?
A direct rollover, also called a trustee-to-trustee rollover, electronically moves the money from one account to another without any action on your part.
With an indirect rollover, you receive a check which you then have to deposit in an approved retirement plan within 60 calendar days of withdrawal. If the check isn't deposited by then, it's treated as an early distribution, subject to additional taxes and penalties.
Tip: Financial institutions often withhold taxes (generally 20%) on indirect rollovers. When you deposit the check into a new retirement account, make sure you also deposit an amount equal to the taxes withheld in Box 4 of your 1099-R. If you don't, the Box 4 amount may be treated as an early distribution. (In the meantime, the Box 4 amount will either be added to your refund or applied to your tax liability, so everything will even out in the end.)
Rollovers are reported on Form 1099-R.