How to Transfer a Traditional IRA

IRA transfers add flexibility to a retirement savings plan.

Transferring funds from an IRA, or Individual Retirement Arrangement, means simply moving them from one account to another. They can be moved between similar IRA accounts, such as between one Roth IRA and another, or they can be moved from a Traditional IRA into a Roth IRA. IRA transfers add flexibility to a retirement savings plan, allowing the account holder to add to a different existing IRA, set up a new account with a different IRA custodian or sponsor, or change the structure of the IRA itself.

Instructions

Direct Transfers

1. Choose the new bank, credit union or other financial institution where you wish to send your direct IRA transfer.

2. Decide what portion of your IRA you wish to transfer. You may transfer as much or as little of it as you wish.

3. Call your current IRA Custodian. Your custodian will be a representative at whatever bank, credit union or other financial institution you set up your original IRA with.

4. Complete a transfer verification form either on paper or online. Your current custodian should provide you with this document.

5. Sit back and relax. The custodian at your current financial institution will send the direct transfer to the new institution, where a custodian there will process and complete it.

6. Expect to pay no taxes or early-withdrawal fees on the funds included in the direct transfer.

Rollovers

1. Expect to handle the IRA funds yourself if doing a rollover transfer.

2. Call your current IRA custodian to initiate the rollover. He will close out your IRA, or remove the allotted amount from it, and send the money to you.

3. Decide whether you want to roll the funds into a similar IRA account or whether you wish to roll funds from a Traditional IRA into a Roth IRA. For tax purposes, you may not transfer funds from a Roth IRA into a Traditional IRA.

4. Select your rollover option within 60 days after receiving the funds. After 60 days, the funds, if drawn from a Traditional IRA, are subject to tax, as well as an early-withdrawal penalty if you are under the age of 59 1/2.

5. Expect to pay tax if you are rolling a Traditional IRA fund into a Roth IRA. Traditional IRA contributions are tax-deductible, while Roth IRA contributions are not, so you must make up the difference during the transfer. Once the old money is in the Roth account, all contributions will be tax-free from that point forward.

6. Call the new financial institution where you wish to send the rollover. It will assist you in setting up your new IRA account and help complete the transfer.

References

• Investopedia: Transfer
• Kiplinger's: Converting Your Traditional IRA to a Roth
• Kiplinger's: Moving Your IRA Money