Where Can I Move My IRA Without Paying Taxes?
Transferring money between retirement accounts could create an unexpected tax event; to prevent this from occurring, one way of minimizing this risk is through direct transfers.
Direct trustee-to-trustee transfers involve moving funds from one IRA plan directly into another without having to distribute it, thus avoiding taxes or withholding.
Direct rollover
Direct rollover is the preferred method of moving funds between different IRAs or retirement accounts, where your plan administrator transfers (either electronically or by check) your entire balance directly to its new destination. Keep in mind that you can only move it once every 12 months or penalties could apply; direct transfers also tend to be easier and less prone to mistakes while indirect rollsovers could require depositing distributions in pre-tax accounts within 60 days or facing penalties.
Direct rollovers differ from indirect ones in that no taxes are withheld from your distribution. With indirect rollovers, however, a check for all of your distribution must be cashed and then redeposited into an eligible retirement account within 60 days; otherwise it becomes taxable and you could incur an early withdrawal penalty of 10% if you are under age 59 1/2.
Ascertaining which option best meets your personal and time considerations depends on personal preferences and available resources. If time is of the essence or there’s no online portal to facilitate the transfer process for your new plan, an indirect rollover might be more suitable; speak directly with your IRA custodians regarding any unique circumstances so that the most informed decisions can be made.
If you wish to move your IRA over to Guideline, there are multiple methods you can take without incurring taxes or penalties. One such way is through direct transfer from your existing IRA into Guideline; this method provides for the easiest and simplest transfer process possible as Guideline will handle the whole transaction on your behalf.
An indirect rollover between your IRA and Guideline’s 401(k) plan may also be an option; though less straightforward, this process still avoids incurring penalties and could provide the opportunity to diversify assets classes more efficiently. It would likely work best for those with large balances in their IRA who wish to diversify them over time.
Direct transfers between Guideline and your old employer’s 401(k) are also an option, although not as simple or hassle-free. Though this might incur extra fees or penalties. As soon as your current employer gives the go-ahead, this may be possible; otherwise, an indirect transfer from them to your new IRA should take place instead. Your former employer and new IRA provider should provide instructions, which should typically include downloading necessary paperwork from each institution. Before making any moves on your own, be sure to speak to an advisor or tax professional – there are numerous rules involving both accounts, making mistakes easy!
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