How to Move Funds From a Self-Directed IRA to a Traditional IRA

A self-directed IRA is typically held with a brokerage firm and you the account owner have the freedom to buy and sell whatever stocks you may desire. This is different from a traditional IRA which is usually in a bank or mutual fund or even with some brokerages. Traditional IRAs are typically managed by professional managers and you have access to a select set of funds or stocks as part of your investment portfolio.

Difficulty: Moderately Easy

Instructions

1. Collect all the necessary information about the accounts you want to rollover and the one you want to roll it into.

2. Contact the financial institution in charge of your self directed IRA and tell them of your intentions. Since most self-directed IRAs are with discount brokers that allow you to conduct most of your account activity online, you may be able to initiate the rollover process online.

3. Open a traditional IRA account if you don't already have one. Contact your bank or financial institution or the many online brokers who will be happy to have your business.

4. Fill out the necessary information. Those in charge where your self-directed IRA is held will send you some paperwork to fill out that will authorize them to make the transfer of assets to your traditional IRA.

5. Make sure the rollover process is complete. If it is a direct rollover, once you have authorized the financial institutions involved you will need to do no more. However, if it is a 60-day rollover, in which case you will receive a check and will then have to complete the rollover on your own, make sure you complete the process in 60 days. If you don't, your rollover funds will be treated as income and you will owe taxes on it. Also if you are younger than 59 1/2 you will pay a 10 percent penalty.