How to Transfer IRA Money to Another Institution Without Paying Taxes

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Transferring funds in an IRA directly from one financial institution to another is a tax-free transaction known as a trustee-to-trustee transfer. There is no distribution to the owner of the IRA. However, a rollover is a distribution of funds from an IRA to the account owner, who may avoid income tax by depositing the funds into another IRA within 60 days. Only one rollover per year is permitted involving the same IRA. This restriction does not exist for a trustee-to-trustee transfer.

Transfer Steps

Contact the financial institution that receives the transfer.

Confirm with the receiving institution that securities transferring are eligible for holding in an account at that institution. Some mutual funds, for example, are not eligible for accounts at particular financial institutions.

Complete the required transfer form with the receiving institution. This will identify the account receiving the transfer, the institution and account sending the transfer and the securities or amount of cash transferring. Transfer instructions may simply indicate that all securities and cash are transferring.

Provide the institution receiving the transfer with a copy of a recent account statement from the institution sending the transfer.

Tips

  • Tip 1: The institution receiving the transfer will initiate the trustee-to-trustee transfer. The IRA owner is not required to contact the institution sending the transfer.

    Tip 2: If any mutual fund is not eligible for the IRA at the receiving financial institution, it must be sold in the account at the sending institution before that money may be transferred. Cash from the sale is transferred instead of the ineligible mutual fund.

References

About the Author

Brian Huber has been a writer since 1981, primarily composing literature for businesses that convey information to customers, shareholders and lenders. Huber has written about various financial, accounting and tax matters and his published articles have appeared on various websites. He has a Bachelor of Arts in economics from the University of Texas at Austin.

Photo Credits

  • Transfer of money from hands in hands image by Irina smolina from Fotolia.com