Owning an individual retirement account is not a static business. Monitoring the investments and keeping abreast of fees and other administrative factors help you ensure you maximize this tax-advantaged opportunity. If you learn of a more appropriate selection of funds for your goals or a more amenable fee structure at another bank or brokerage, you might want to transfer IRA money to a new institution. One way to make the transfer free of tax is to initiate a direct, or trustee-to-trustee, transfer. Another way is to have the originating trustee write out a check to the new trustee and ferry it to the new trustee yourself.
Download or acquire forms to open an IRA at the new institution. This typically involves filling out an application with your name, contact information, Social Security number and date of birth. You may also have to indicate your initial contribution amount and investment selections. Name your beneficiaries on the designation form. Sign the paperwork and submit it to the new bank or brokerage.Step 2
Contact your original trustee to request a direct transfer of your IRA funds to the IRA at the new institution. If you want to maintain your current investments, your trustee may be able to make an in-kind transfer, leaving your investments in place. If you are moving the funds with the purpose of making entirely new investments, have the trustee liquidate the assets for transfer.Step 3
Check to see that the transfer has taken place. If it has not been completed within five business days, contact the original trustee.
By CheckStep 1
Obtain the forms to open an IRA at the new institution. The IRA application requires your name and contact data, Social Security number and date of birth. Initial contribution amount and investment selections may also be required. On the beneficiary designation form, name the person or persons to whom you want the funds to go after your death. Sign the paperwork and submit it to the new bank or brokerage.Step 2
Get in touch with your original trustee and tell the institution you want to make a transfer. Moving all the IRA money means closing the original account. You may need to fill out account closing paperwork and pay a fee, depending on the rules of the institution.Step 3
Ask the trustee to make out a check for the transfer amount to the new trustee. Provide the full legal name of the new institution to the original trustee for this purpose.Step 4
Walk in or mail the check to the new financial institution as a contribution to your new IRA. If you use mail, use certified mail with a return receipt. The check has to be posted to your new IRA account within 60 days of its receipt to avoid taxes and penalties.Step 5
Check with your new trustee to see that the transfer has taken place.
- For a traditional IRA, if you have a check made out to you and transfer the funds to the new institution yourself, you will be subject to 20 percent withholding on the amount of the transfer. If you made the withdrawal before age 59 1/2, you will also owe a 10 percent early withdrawal penalty when tax-filing time rolls around if you don't pay the taxes with nonretirement funds.
- You have already paid taxes on Roth contributions, so withholding does not apply. However, if the withdrawal included any earnings on principal and you are not yet 59 1/2, you will owe the 10 percent penalty on the earnings amount.
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