As outlined in The Retirement Challenge: Will you Sink or Swim?, co-authored by Jason Doss, You may find yourself in need to transfer assets from one qualified account (i.e. a 401(k)) into another qualified account (i.e. an IRA). When transferring assets from one qualified account to another, make sure that you elect a “trustee-to-trustee” transfer. In order to accomplish this, you will need to ask for the appropriate paperwork from the financial institution that is the custodian of the IRA into which you want to rollover money. The trustee-to-trustee transfer will ensure that the money will be transferred directly from one financial institution to the other.
If you receive the money, rather than electing a trustee-to-trustee transfer, then you should keep in mind that the IRS will consider it to be a distribution. This distribution is subject to be taxed and penalties may be imposed, unless the money is rolled over into another IRA within 60 days. If you decide to roll the funds over into another IRA yourself, make sure that you deposit the money with a trustworthy bank or financial institution. Furthermore, upon deposit of the money ensure that you are provided with a receipt.
It is recommended that you do not rely on a third-party to deposit the money on your behalf. You may become a victim of fraud this way. The third-party may elect to endorse the check and deposit it into their own account rather than into an IRA. It may be very difficult to recover the money when this happens.
However, if you have become a victim, there may be another party that could be held liable in this situation. Therefore, you should contact an attorney to consider your legal remedies.