transferring traditional IRA

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
ketanco
Posts: 130
Joined: Wed Jul 24, 2013 7:09 pm

transferring traditional IRA

Post by ketanco » Fri Mar 22, 2019 8:53 am

When you transfer your traditional IRA from one bank to another (receiving no money, so just transfer as it is), is there a tax related document next year from either of the banks and how to deal with it?

Alan S.
Posts: 8889
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: transferring traditional IRA

Post by Alan S. » Fri Mar 22, 2019 10:32 am

ketanco wrote:
Fri Mar 22, 2019 8:53 am
When you transfer your traditional IRA from one bank to another (receiving no money, so just transfer as it is), is there a tax related document next year from either of the banks and how to deal with it?
An IRA direct transfer does not produce either a 1099R or a 5498 from the receiving custodian. That said, banks will mess this up occasionally and issue a 1099R. If you get a 1099R, demand to have it corrected to 0. You are only allowed one 60 day rollover for all your IRA accounts over a 12 month period so you should not use up that rollover barring a total emergency.

Note that a check made payable to your new bank FBO you and handed to you for delivery qualifies as a direct transfer in all respects. Make sure that no check is made payable to you personally, as that would be a distribution and reported on a 1099R.

If you have multiple IRA accounts at banks, it might be better to consider brokered CDs offered by major IRA custodians such as Schwab, Vanguard or Fidelity. Just one brokerage IRA can hold unlimited FDIC insured CDs, so when one of these CDs matures the funds are paid back into the brokerage account money market fund from which you purchase the replacement CD. The beneficiary must be the same as it is listed on the IRA account itself, not the individual CDs in the account. There are some other differences between bank CDs and brokered CDs you should also be aware of.

Post Reply