Transfer

An IRA transfer is the exchange of assets from one IRA to another directly, without the money ever touching the hands of the owner (i.e. electronic transfer, or check directly made out to new custodian). This differs from an IRA Rollover which we discussed in a different section.

One can make unlimited IRA transfers (not sure why you’d want to test this rule!) whereas rollovers are limited to once per year (likely because in many rollover situations, the investor can “touch” the money).

A transfer may be helpful if:

  • You are unhappy with the funds, expenses, or services of one IRA company
  • You want to invest in alternative assets and would like to take advantage of the opportunities of a self-directed IRA
  • You would like to consolidate multiple IRA accounts to one for simplicity

These are 3 of many reasons someone might consider an IRA transfer. Typically, the process of effecting a transfer is as follows:

  • Establish an account with the new IRA custodian (they are called “custodians” because technically, an IRA account is a trust account for the benefit of the investor)
  • Complete the transfer paperwork provided by the new IRA company and fill out the instructions correctly (ask if you aren’t certain) and include a copy of your latest statement from the soon to be former account
  • Await confirmation of electronic transfer

Some firms may have additional requirements but my experience with IRA transfers is that there usually aren’t any additional requirements.

Note: 401(k) plans often require additional steps to roll money over.

Note 2: if you are married and do not designate your spouse as primary beneficiary, your spouse will have to sign off on that. There are laws to protect spouses from being disinherited – which follows more in line with existing probate laws that are in place to protect spouses from disinheritance unless consent is given.

If you’d like to read more about IRA’s, try:

IRA Page

IRA Rollover Section

Roth Conversion – a Good Idea?

For questions and more information, contact us here:

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