Theoretically, transferring an IRA between brokerages should be an easy task: You’re just finding a new custodian to mind a non-tangible property for you. In reality, the transfer process can be wrought with headaches, and in some cases your broker might refuse to put the transfer through. Knowing the causes – and a few solutions – to your transfer problem can help you navigate the process.
Investigate Reasons for Refusal
Although your broker simply might not want to lose your business when he transfers your IRA to a new firm, it's possible that he can't make the transfer. Your IRA might contain shares of a proprietary mutual fund owned by your old firm, or shares of a security sold only by your old firm. In this case, you can’t transfer the IRA to a new firm even if your broker isn’t stonewalling your transfer. You need to change the composition of your IRA with your old firm before making the transfer.
Other times, your broker might squash a request to transfer your IRA simply because of procedural problems. Your brokerage will transfer accounts only between matching types: If you want to transfer your IRA assets to a Roth IRA with another firm, your broker will refuse the request. Additionally, the information you provide on the transfer form sent by your new firm must exactly match your information at your old firm, so make sure both firms have up-to-date information before you begin the process.
Consider a Rollover
Although trustee-to-trustee transfers are by far the easiest way to move assets, you may treat the transfer as a rollover. In this case, you cash out your IRA with the old firm, and you reinvest the funds in an IRA with the new firm. The Internal Revenue Service gives you a 60-day window to complete the rollover without incurring an early-distribution penalty and owing income taxes on the money. Although this do-it-yourself strategy can work, be careful to avoid slip-ups that could incur heavy taxes.
File a Complaint
If you believe your broker is refusing your request to transfer your IRA to another firm simply to avoid losing your business, you may file a complaint letter with the Financial Industry Regulatory Authority, or FINRA. The authority’s website accepts online complaints; investors also can print a complaint form. If FINRA determines that you were treated unfairly, it can impose sanctions such as fines or suspensions against the broker.
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