IRA TRANsFER vs ROLLOVER

Although both rollovers and transfers allow you to move your retirement savings from one financial institution to another, the process for each is different, and each have different rules.

A 401(k) rollover occurs when you move retirement funds from an employer-sponsored plan to an IRA this is why it's also called a Rollover IRA. This option is typically chosen when an employee leaves a job and is no longer contributing to the employer-sponsored retirement plan.

A Transfer is when you move your IRA to another IRA at a different institution. In the case of a transfer, funds or assets are sent between institutions, from the previous custodian or trust company to the new one. This is not only the quickest, but also the best method of moving your IRA to avoid any potential penalties by missing the 60 day deadline.

 IRA Transfers

IRA-to-IRA transfers are easy and the best way to move your retirement savings from one custodian to another. For example, you would do a transfer when moving an IRA from broker dealers like Fidelity, Schwab, Vanguard, TD Ameritrade, etc. to IRAR.

Transfers are initiated at the company where you want to move the IRA. For example, if you wish to move your IRA to IRAR:

1. You would first complete our Transfer Form and send it back to us
2. We would then send the completed form to your existing provider
3. Your provider would then send your retirement funds and/or assets to IRAR

You can transfer as much as you want or only the portion of your account you wish to invest in alternative assets— investment options typically not available or allowed at your current provider such as real estate.

 What is a Rollover IRA?

It is when you move retirement funds in an employer-sponsored plan—such as a 401(k) and deposit into an IRA. There are two types of rollovers, Direct Rollovers and Indirect Rollovers. 

A Direct Rollover is when the retirement funds in an employer-sponsored plan such as a 401(k), are moved directly from one institution to another, and then deposited directly into an IRA. This is the most productive method of moving an old 401(k) to a rollover IRA because you, never take direct possession of the funds, and therefore the mandatory 20% withholding for taxes is not applied.

The rollover transaction is usually initiated by you the plan participant and requires only two steps. First open an account and complete a Rollover Certification Form. Two, complete the forms required by your employer to move the funds out of your 401(k).

An indirect rollover—also referred to as a 60-day rollover—is when you take possession of your retirement funds and/or assets before depositing them back into a retirement account, and do so within 60 days. For example, if you request your funds from your old 401k but have not yet established an IRA in which to deposit those funds, in most cases your employer will give you a distribution check in your name. You’ll then have 60 days from the day the distribution check was issued to deposit those funds in a retirement account. If you fail to complete the transaction in the 60-day window, you will be taxed and penalized if you are under age 59. We do not recommend transferring your account this way unless its the only choice as delays could cost you money. 

A transfer is where your retirement funds are moved directly from one custodian to another. You don’t see the money at all— it goes directly from your old plan to your new plan. This isn’t a taxable event and it isn’t reported to the IRS (unlike a rollover), so there’s no need to think about taxes. You can transfer your account as many times as you’d like, there is no limit on number of transfers per year.

One thing to remember when transferring retirement plans there are restrictions on which plans can transfer into what account-type. Roth IRAs can only transfer into other Roth IRA's so make sure you have opened the right type of IRA account before transferring your funds. Our goal is to make retirement easy, from start to finish. We keep the process simple and easy to follow. If at any point you’d like clarification, please reach out to us— a representative would be eager to help you.

How do I transfer an IRA from one custodian to another? 

To transfer an IRA from one institution to another, you must open an IRA account where you are moving the old IRA to first. First, complete an new account application and Transfer Form (acat transfer form). Submit your documents with a copy of your current ID and an recent account statement from the IRA that you will be transferring. The new custodian will send the request to your current custodian to begin the account transfer process. This should take 7-10 days to complete.

 What is the difference between a transfer and a rollover? 

Although both rollovers and transfers allow you to move your retirement savings from one financial institution to another, the process for each is different, and each have different rules. A rollover occurs when you move retirement funds from an employer-sponsored plan (like a 401k) to an IRA. A transfer occurs when you move one IRA from one custodian to another IRA custodian.