How to Move Money From a Taxable Account to an IRA
Moving money from a regular, taxable account to an IRA is a simple process. The Internal Revenue Service limits the maximum payments that you can make to an IRA every year at $5,000 for people under 50 and $6,000 for people between 50 and 59.5 years old. You must have an open IRA account before you transfer money to it. The most convenient method of distributing funds to an IRA is to set up an automatic transfer before the cutoff date.
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Instructions
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Decide whether you would like to open a Traditional IRA or a Roth IRA. If you distribute funds to a Traditional IRA, your gross income will be reduced by a corresponding amount for that year, but you will have to pay taxes on funds you withdraw during your retirement. In a Roth IRA, you pay taxes on all income you receive for that year, but withdrawals after retirement will not be taxed.
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Open an IRA at a financial institution or brokerage of your choice. You will need to fill out an application to be approved for an IRA, but there's no credit or background check involved. The firm that will hold your account simply needs to check if you have an IRA already open somewhere else.
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Schedule a deposit from one of your taxable accounts to your IRA. The funds can be transferred from a checking, savings or brokerage account. If you have a Traditional IRA, you can deduct the amount that you've deposited from your gross income. If it's a Roth IRA, you don't have to take any special steps in reporting it to the IRS. The funds in your IRA will not be subject to income or capital gains taxes.
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Choose to schedule regular deposits or a lump sum deposit to your IRA every year. The maximum contributions to IRAs have increased regularly every few years since the program was started. Expect to change your retirement savings plans accordingly as policies change.
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Invest the money in your IRA to assist in your retirement planning or merely to get the most out of your money if you're primarily using the account as a method to reduce your tax exposure.
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