How to Transfer Ownership of an IRA
Transferring ownership of an IRA can be a fairly simple process, though the circumstances and how exactly it is done can result in fees or taxes. Transferring to a person who owns an IRA within the same institution may require only a few forms to be filled out by both parties. If the person does not have an IRA--or if the transfer is due to splitting assets during a divorce, or to the death of the original owner--additional factors must be taken into account.
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Instructions
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Consider changing the name on the IRA. This is the easiest and quickest method to transfer ownership. Contact the IRA custodian. You can find contact information on your statements. Tell the custodian you wish to change the name on your IRA. She will give you forms to fill out for the original IRA owner to change the name to the new owner. This is done generally during divorce proceedings, when there is a divorce decree, property settlement agreement or separate maintenance and one spouse is required to transfer all or part of the IRA to the spouse or ex-spouse.
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Decide whether the transfer will include the original IRA's existing investments or if it is better to liquidate the account and transfer cash. The original IRA holder must verify whether the party she wishes to transfer the IRA to already has the same type of IRA and the institution will accept the transfer. For example, T. Rowe Price accepts transfers of shares of its own funds but requires other investments to be liquidated.
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Ask the IRA custodian for the appropriate forms to fill out for a transfer of ownership for your IRA. This is different from changing the name on the IRA. Ask whether there are maintenance and/or administrative fees from the delivering custodian. If the IRA owner wishes to withdraw IRA funds, write a check and give this to the new owner; the delivering institution should deduct fees before issuing the check. If any assets within the IRA are nontransferable and must be liquidated, do this first, as it must be done before ownership is transferred.
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Fill out the forms your institution gives you for the transfer. Double-check your cash balance, account number and/or number of shares being transferred. The person that the IRA is being transferred to may have to verify his or her name, Social Security number and perhaps other forms of identity, such as a passport or driver's license. Contact the IRA custodian if there are any discrepancies. Ask the transferring institution what transfer method will be used. Many brokerage firms use ACATS (Automated Customer Account Transfer Services) that can take up to six business days. Some firms do manual transfers that can take six to eight weeks. Verify with both account custodians that the IRA was transferred and received.
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If you use a check for the transfer, make sure that it is payable to the new IRA custodian. If it is payable to the original IRA owner, with the intent that he will transfer the funds to the new custodian, it will be considered a distribution if the money is not put into a retirement account within 60 days and will be subject to a 20 percent tax from the IRS.
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References
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