Direct transfers allow you to move your IRA money from one brokerage to another without actually taking possession of the funds. Most brokerage firms use the Automated Customer Account Transfer Service (ACATS) electronic system to ensure accurate and timely transfers between accounts. If there are no problems, the transfer may be as fast as six days through the ACATS system. If you are not able to use the electronic system, your IRA transfer can take up to several weeks. This usually happens because the types of securities offered by your new brokerage do not match the ones you had in your old account. In this case, your existing brokerage must liquidate the securities and send the cash proceeds to your new account.
Open an account at your new brokerage firm. Set up a custodial arrangement for the incoming IRA funds. Retirement funds must be held by a brokerage firm on your behalf or you might be taxed as if you were taking a direct withdrawal. Your transfer will be delayed if you do not have this custodial agreement arranged before the funds are sent.
Request a transfer form from your new brokerage. Make sure you have the right type of form for transfers between IRA accounts. Some brokers have an all-in-one form for all transfers, while others require different forms for different types of accounts.
Fill in your contact information, social security number or tax identification number, existing IRA account number, and the brokerage firm's name, phone number and address.
Make a copy of the transfer form for your files. Send the original to your new brokerage firm, along with a recent statement from your existing IRA account.
- You can also move your IRA funds through a rollover instead of a direct transfer. If you choose this method, you must request a withdrawal from the original IRA and re-deposit it into your new account. You must make the deposit within 60 days or you will be taxed on the entire amount. You will also be subject to a 10 percent early withdrawal penalty if you are younger than 59 1/2.
- Direct transfers are not permitted between different types of IRA accounts. If you have a Roth IRA, you must transfer your funds to another Roth IRA, not a traditional IRA or SIMPLE IRA.
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