How Do I Roll Profit Sharing into an IRA?

Transferring assets from your profit-sharing plan to an IRA is a quick, easy process.

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Profit-sharing plans are among the most popular forms of employer-sponsored incentive benefits provided by companies, enabling employees to participate in the profit of the corporation. They are funded by the employer for the benefit of the employee. Because they are considered a qualified retirement plan by the IRS, the assets within a profit-sharing plan (cash or securities) can be easily rolled into an IRA.

Step 1

Decide how you want your assets transferred into the IRA. You can have them transferred in-kind, meaning the assets (cash, stocks and mutual fund shares) are transferred "as is" directly into the rollover IRA account. Alternatively, you can elect to have the assets sold and the cash proceeds transferred into the IRA rollover account.

Step 2

Notify your financial adviser or broker that you want to open an IRA rollover account for the purpose of rolling over the assets of your profit sharing plan into the IRA. Alternatively, you can select an IRA custodian directly to establish an IRA rollover account.

Step 3

Complete the IRA rollover application form to establish the IRA rollover account. You'll also need to fill out the transfer form providing authorization and instructions regarding the transfer of assets from the profit sharing plan to the new IRA rollover account. Your custodian, broker or adviser can provide the forms, or you can generally download them directly from the Internet. Once signed, submit the forms to your broker, adviser or custodian.

Step 4

Allow a couple weeks for the transfer to complete. Check with your adviser, broker or custodian to ensure the cash or securities have been successfully transferred into the new rollover IRA account.

Step 5

Follow up with your profit-sharing plan administrator to ensure all assets, including any interest income or dividends, were transferred. If there are assets that have not yet transferred, you'll need to recontact your broker, adviser or custodian to initiate the transfer of those assets.