Looking to Move Funds or Assets from One Custodian to Another? Some Information to Know

By Elsie Dudukovich0 Comments

Although funds leave an IRA custodian and return to a custodian, the terms “rollover” and “transfer” are not interchangeable.  Learn more about custodian to custodian transfers. 

What is a rollover?
A rollover is when a person requests a personal distribution from his or her account and then redeposits, or “rolls,” the money into a like tax environment account. Taxes and penalties can be avoided, if the distributed funds are deposited into a like account within 60 days from the date of distribution.  The IRS allows one IRA rollover in any 12-month period – per person, not per IRA.  It’s important to remember the 12-month period begins on the date a person receives the IRA distribution - not on the date it is rolled back into an IRA.

Read more on IRA rollovers:
Funding Your IRA with a Rollover? Make Sure You’re on the Right Side of the IRS
IRS Clarified IRA Rollover Rule

What is a transfer?
A person can complete a transfer if he or she holds an IRA at another financial institution and would like to move to an Equity Trust account.  

Transferring funds from one custodian to another is a nontaxable event – providing the account types are the same tax environment.  This is often described as “transferring like to like.” It’s not a reportable event when someone moves funds from one custodian to another, without ever taking personal ownership of the funds. 

Unlike rollovers, the IRS does not limit the number of custodian to custodian transfers a person can do within any particular time frame – nor does it a set time period the transfer must be completed. Cash and assets, in-kind, can be moved through a transfer. The account holder can transfer all or only part of the holdings in a timing that works best for his or her goals.