What is a Transfer?

What Is an IRA Transfer and Why Should You Consider One?

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Over time, you might find the Individual Retirement Account (IRA) investment choices that made sense when you opened the account aren't working as well for you now. An IRA transfer is simply the process of moving funds between IRAs.

Why transfer?

You may want to move to a different type of investment, choose an investment that better fits your current needs and circumstances, or move your account to another fund or financial institution to keep your retirement and financial assets in one place.

A transfer is not considered to be a withdrawal for tax purposes, so there will be no reporting to the IRS and no taxes withheld. Generally, a transfer applies to IRAs of the same type: moving funds from an existing Roth IRA to another Roth IRA, or an existing Traditional IRA to another Traditional IRA. You can also transfer funds from a SEP IRA to a Traditional IRA or a SIMPLE IRA to a Traditional IRA, as long as you have had the SIMPLE IRA for at least two years.

(Note: A transfer from a Traditional IRA to a Roth IRA is known as a conversion, and different rules apply. To calculate the impact of converting your Traditional IRA to a Roth IRA, visit this calculator.)

How a transfer works

The process is simple. First, choose the account you want to transfer IRA funds to. It may be an IRA that you already have, or it may be a new one. Then, tell the new company that you want to transfer funds from an existing IRA, and give them the account details. The two companies will handle the transfer for you.

Some people are nervous about setting up a retirement account because they are afraid that they will make the wrong investment choices. The transfer privilege gives you confidence, because if your investment needs change, you can move your IRA with ease. Together, we can find other ways to help.


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