There's no need to put up with an IRA that isn't earning enough. With an IRA rollover, you can transfer some or all of your account assets into another retirement account. You can also transfer your traditional IRA assets to a Roth so that your withdrawals in retirement will be tax-free. You cannot, however, roll over a Roth into a traditional account.
Do It Yourself
If you want to transfer money between IRAs, you can ask your current administrator to cut you a check, then deposit the money in your new account. This is risky, though, as you have only 60 days to complete the rollover. Any longer and the IRS will treat it as a fully taxable withdrawal, even if you eventually follow through. If you show the IRS you tried to complete the transfer but the bank screwed up, you're entitled to an automatic waiver of the tax penalty.
You're much safer if you let the trustee managing your IRA handle the transfer. Give him the information on your new account and she'll shift your assets to the appropriate account trustee at your new brokerage. As you never handle the money, the IRS has no reason to slap you with a penalty. When you manage the transfer yourself, the trustee has to withhold tax on the withdrawal, but you duck that when you use a trustee-to-trustee transfer.
If you transfer money from a traditional IRA to a Roth, it gets more complicated. With a traditional IRA, withdrawals are normally taxable; with a Roth, deposits are taxable and withdrawals are tax-free. So guess what -- when you go traditional-to-Roth, you pay tax, at your regular income tax rates, on whatever you transfer. Otherwise the process works the same. The advantage is that any earnings your Roth generates after the rollover will be tax-free when you withdraw them.
If you inherit an IRA from your spouse, you have the option to roll the contents over into your own IRA. If the deceased wasn't your spouse, the only way to roll them over is to open a new account for that purpose and have the trustee transfer the assets. The account name must identify you as the deceased's beneficiary. Unlike other rollover accounts, this one requires you to start taking regular withdrawals almost immediately, based on your life expectancy.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.