IRA investors have an easy method available to them for moving assets among their IRAs: an IRA-to-IRA transfer. Some may use this tool to consolidate their accounts, build balances to purchase an alternative asset, add liquidity to a self-directed IRA, or change IRA custodians. You can transfer assets between IRAs held by the same IRA custodian or transfer between financial institutions. Unlike rollovers, which are reportable to the IRS and potentially taxable, assets transferred directly between your IRAs do not have to be reported to the IRS and generally do not have any tax consequences.
Transfers are nonreportable and nontaxable so long as they occur between two like IRAs. For example, you can transfer money from a Traditional (or SEP) IRA to a Traditional (or SEP) IRA, even if one or both IRAs are self-directed. You can also transfer between Roth IRAs and between SIMPLE IRAs at any time. (You also may transfer assets from a SIMPLE IRA to a Traditional IRA after you meet the two-year waiting period starting with the first contribution to the SIMPLE IRA.)
A transfer of assets would be taxable if
1. Assets are moved from a Traditional IRA to a Roth IRA because the assets are changing from pre-tax to after-tax status (known as a conversion).
2. You can access the funds for personal use. (You may hand-carry a check to the new IRA custodian, so long as the check is made payable to the receiving institution for the benefit of the IRA.)
You can choose to transfer your entire IRA balance or just a portion of the balance, and you can transfer cash or property. The custodian will not apply income tax withholding because there is no distribution taking place. The IRS does not limit the timing or number of these transactions, but IRA custodians may choose to apply transaction or investment fees. Because transfers are not reported to the IRS, you will not receive an IRS Form 1099-R or 5498 tracking the movement of assets.
A rollover, on the other hand, is subject to different rules and often has tax consequences. It’s important to understand the differences between your IRA transfer and rollover options so you can preserve as much of your savings as possible while moving your money to the savings vehicle and IRA custodian you choose.
Transfers vs. Rollovers Between IRAs
|No time limit||60-day time limit|
|No limit on frequency||Only one rollover allowed every 12 months|
|Nontaxable||Any portion not rolled over within 60 days may be taxable and subject to 10% early distribution tax, including withholding amount|
|Nonreportable||Reported as a distribution on Form 1099-R; reported as a rollover contribution on Form 5498|
|RMDs may be transferred if taken by deadline from receiving IRA||RMD must be taken prior to the balance being rolled over|
If you want to transfer IRA assets to STRATA, and you’re an existing account holder, simply download our IRA Transfer Request Form.
If you don’t have a STRATA IRA, you’ll need to open an account and set up an IRA. Go to our Get Started section to open an IRA using our Online Account Opening feature or download the IRA Application.
Remember when transferring assets in-kind (other than cash), the assets must be something that STRATA Trust will accept and hold. If the asset to be transferred is property (directly-owned) or a private equity or private debt investment, please refer to the appropriate Investment Checklist for that investment type. Direct transfers of publicly traded stocks, bonds and mutual funds require a brokerage account with any clearing firm or discount brokerage.
If you have questions about transferring IRA assets to a STRATA IRA, please contact us at 866-928-9394 or Service@StrataTrust.com.