FAQs – Transfers and Rollovers between IRAs

How can I move my IRA assets from one financial institution to another?
There are two basic ways you can move your IRA assets from one financial institution to another: an IRA transfer or an IRA rollover. In an IRA transfer, your IRA proceeds are sent directly from your current IRA trustee or custodian to your new IRA trustee or custodian (i.e., the IRA funds are not distributed to you). In an IRA rollover, on the other hand, your IRA assets are distributed to you and you must subsequently redeposit them into an IRA within 60 days to avoid taxation. (Note: There are restrictions regarding how frequently you may roll over your IRA assets, so be sure to familiarize yourself with the restrictions before taking a distribution of your IRA assets.)

What is the primary difference between an IRA transfer and an IRA rollover?
In the case of an IRA transfer, an individual's IRA assets are generally transferred directly from one IRA trustee or custodian to another. Because IRA assets are not distributed to the IRA holder in an IRA transfer, IRA transfers are not reported to the IRS. With an IRA rollover, on the other hand, IRA assets are generally distributed to the IRA holder who must then redeposit the assets into an IRA within 60 days to avoid taxation. Because assets are distributed to the IRA holder in the case of an IRA rollover transaction, IRA rollovers are reported to the IRS by the IRA trustees/custodians involved, and must also be reported to the IRS on the IRA holder's federal tax return (notwithstanding the fact that a qualifying IRA rollover is a nontaxable event).

Are nontaxable transfers between IRAs reported to the IRS?
No. Direct transfers between IRAs generally need not be reported to the IRS, as funds are not distributed to the IRA holder.

Are rollovers between IRAs reported to the IRS?
Yes. The financial organization that distributes IRA assets to an IRA holder for rollover purposes must report the distribution to the IRS on IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc. (regardless of whether the distribution is actually rolled over). The financial organization that receives a rollover contribution must report the rollover contribution to the IRS on IRS Form 5498, IRA Contribution Information. In addition, IRA holders who conduct a tax-free rollover between IRAs must report the transaction as a nontaxable IRA distribution on their federal tax return.

How long do I have to make a rollover contribution after taking a distribution from my IRA?
Generally speaking, you have 60 days to conduct a rollover contribution and avoid taxation after taking receipt of an IRA distribution. The 60-day timeframe for making a valid rollover contribution begins with the day following the day on which you have constructive receipt of an IRA distribution.

Are there any federal limits governing the number of times I can directly transfer my IRA assets between IRAs?
No. There are no federal limits on the number of direct IRA transfers you may conduct.

Are there any federal limits governing the number of times I can roll over my IRA assets?
Yes. If you make a tax-free rollover of any part of a distribution from a Traditional or Roth IRA, you cannot, within a 1-year period that begins on the date of distribution, make a tax-free rollover of any later distribution from that same IRA. In addition, you may not roll over the same IRA dollars more than once within the same 1-year period. The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. (Note: This 1-year restriction does not apply to rollover transactions in which Traditional IRA assets are being converted to Roth IRA assets, and does not apply to certain failed attempts to purchase a first-time home.)

Can I transfer or rollover assets from my Traditional IRA to a Roth IRA?
Qualifying individuals can convert all or part of their Traditional IRA to a Roth IRA by rolling or transferring their Traditional IRA assets to a Roth IRA. To qualify for a conversion, you (or you and your spouse, if married) must have modified adjusted gross income for the year of $100,000 or less. If you are married filing separately, you generally cannot qualify for a conversion regardless of your level of modified adjusted gross income (unless you did not live with your spouse at any time during the year). When converting from a Traditional IRA to a Roth IRA, you must generally include the amount distributed from your Traditional IRA in your taxable income for the year of distribution (less any amount which represents the return of nondeductible basis).

This information is not intended to be legal or tax advice. Please consult a tax, legal, or financial professional with questions.

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