An IRA transfer is the exchange of assets from one IRA to another directly. Specifically, without the money ever touching the hands of the owner. As a result, a transferring custodian will execute this via electronic transfer. Or check directly made out to new custodian. This differs from an IRA Rollover which we discussed in a different section.
How Often Can Someone Transfer an IRA?
One can make unlimited IRA transfers. Though I’m not sure why you’d want to test this rule! Whereas rollovers are limited to once per year. This is 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 you 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.
Why Might Someone Consider a Transfer?
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 then fill out the instructions correctly (ask if you aren’t certain). Furthermore, 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 in my experience with IRA transfers is that there usually aren’t any additional requirements.
Additional IRA Transfer Notes
- If you are married and do not designate your spouse as primary beneficiary, your spouse will have to approve that. There are laws to protect spouses from being disinherited. These laws follow more in line with existing probate laws that are in place to protect spouses from disinheritance unless consent is given.
- 401(k) plans often require additional steps to roll money over.
Questions About an IRA Transfer?
For further reading on a Transfer IRAs in General
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