How to Transfer Stock Into an IRA
You can usually transfer stock to an IRA from another IRA or from another type of retirement account, like a 401(k). Talk to the company that manages the IRA to get the process started. You usually can't transfer stock from a nonretirement account to an IRA.
You can contact the companies that manage your accounts to ask about transferring stock from another retirement account into your IRA. The need for liquidation makes transfers from nonretirement accounts into an IRA much more complex.
Transferring from Other Retirement Accounts
You generally can transfer shares from a retirement account – such as a 401(k), 403(b) or IRA – into another IRA. There shouldn't be any tax penalty, and you won't have to go through the expense or trouble of selling the stock in one account only to buy it in another.
Talk to the companies that manage the two accounts to learn exactly what's possible, how long it will take and if any fees are involved. In some cases, the company you're transferring the assets to may waive any fees or even reimburse you for fees charged by the other company.
Understanding Transfer Limitations
If you hold assets other than stock in a retirement account, like mutual funds that are only offered through a specific financial institution, you might not be able to transfer those to an IRA, since the company that manages the IRA might not be able to hold them for you. In that case, if you do want to roll your funds over to an IRA, your only option might be liquidating the account and having the companies involved transfer the funds to the IRA, where you can reinvest them.
Considering Potential Tax Consequences
If you ever transfer funds from a 401(k), IRA or other retirement account to a nonretirement account, you are likely to owe tax. You will likely owe income tax on the funds transferred, and you may even owe an additional tax penalty if you are under the retirement age.
If you ever receive a check from a retirement account to withdraw funds, make sure you understand the tax consequences. If your goal is to transfer the money to an IRA, you have a limited amount of time to do so without getting a tax bill.
Transferring from Nonretirement Accounts
Unfortunately, if you have shares of stock in a traditional brokerage account that's not a retirement account, you usually can't just transfer them to an IRA. Transfers to IRAs generally have to be in the form of cash.
In this case, you'll have to sell the shares, transfer the funds to the IRA and, if you wish, buy equivalent shares in the IRA. You may owe tax based on gains from the stock sale, and you'll need to make sure the amount transferred falls under the annual IRA contribution limits.
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.