What Is A Transfer?

Over time, you might find that the IRA investment choices that made sense when you opened the account no longer work for you. 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 more of your retirement and financial assets together.

The process of moving funds between IRAs is known as a transfer. 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. (A transfer from a Traditional IRA to a Roth IRA is known a conversion, and different rules apply.)

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 will be adding funds from an existing IRA, and give them the account details. The two companies will handle the transfer for you.

A transfer is not considered to be a withdrawal for tax purposes, so there will be no reporting to the IRS and no funds withheld.

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 peace of mind; if your investment needs change, you can move your IRA with ease.