How to Transfer IRA Funds to Purchase Stock

An online brokerage IRA will allow you to buy stocks with IRA funds.

An online brokerage IRA will allow you to buy stocks with IRA funds.

Your individual retirement account is sitting in a bank CD or conservative mutual fund and not making much money. To put some zip into your IRA, you want to take more control over your retirement savings and start buying individual stocks. An IRA account with a discount online broker will allow you to invest your retirement funds in any stocks you choose. You just need to get the money from where it is into that new brokerage account.

Open an account with a discount online brokerage. As part of the application process -- done online -- you will have the option to designate the account as an IRA. Smart Money magazine publishes an annual review and ranking of discount brokerages

Complete a transfer request form from your new IRA brokerage account. Provide the information from your current IRA and the new IRA custodian will initiate the transfer and have your money moved from the old IRA into your new brokerage IRA. YOu may be able to complete the transfer request online.

Verify that the transfer has been completed and that the money is now in your brokerage IRA account. The time to transfer depends on the policies of your current IRA custodian. If there appears to be a delay, get on the phone with both custodians and find out what is the hangup.

Buy stocks with your IRA money using the broker's online stock trading tools. Typically, you navigate to a stock trading screen, enter the stock symbol of the shares you want to buy, indicate the number of shares and submit the order. You will own the selected stock in a few seconds -- assuming the stock exchanges are open.

Tips

  • Another option to move IRA money is a rollover. With a rollover the custodian of your existing IRA sends you a check for the IRA proceeds and you deposit the check in another IRA account. You have 60 days to deposit the money and you can roll over an IRA just once a year. There is no limit on transfers.
  • Check your existing IRA custodian for any account closing fees. Some brokerage firms will reimburse those fees if you open a new account.
  • Only buy stocks during stock market hours. After-hours orders could be filled at very unfavorable prices.
 

About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.

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