Opening a conversion Roth IRA is one way you can prepare for your retirement. If you have two of the same type of IRA accounts, you could be losing money by paying annual custodial fees for each account. You also might face the danger of exceeding the annual limit by making too big a contribution into one account. By rolling one account into the other, you can eliminate the extra fees and prevent being penalized by the IRS for exceeding the maximum contribution limit.
Review your Roth IRAs by comparing the interest rates, management and/or custodial fees and the terms for each account to determine which one to keep. Consider rolling over both accounts into a new conversion Roth IRA if the custodial fees are lower and the account terms significantly better. Find out if the account you plan to keep or the new account you're considering opening offers a fee discount for larger accounts.Step 2
Decide which institution offers the best Roth IRA for your needs. Contact the customer service department of both companies to see if a trustee-to-trustee account transfer is possible. Download the transfer and closing documents and complete them as soon as possible. Check to see if you can email or fax the documents to the respective companies once they are ready. The closing institution should electronically transfer the funds and close your account once it's received and approved your closing documents.Step 3
Close the account by mail if one of the companies won't do a trustee-to-trustee transfer. Have the company send you the documents needed to close the IRA. Once you've completed and returned the closing documents, the company will mail a paper check with the proceeds to you. The check should be made out to the new account custodian. Send the check using a tracking service, such as registered or certified mail, to insure it reaches the receiving company timely.
- Keep the funds in your Roth IRA for at least five years to avoid a penalty for early withdrawal.
- Although the rollover is not taxable, you will receive a 1099 from the old custodian and a Form 5498 from the new custodian so you can report the rollover to the IRS.
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