Prior to 2001, a traditional IRA holder could only roll, or convert, assets into another IRA. He could not roll them into an employer-sponsored plan, like a 401(k), for example. The Economic Growth and Tax Relief Reconciliation Act brought about greater freedom to roll one type of retirement account into another. As of 2012, however, you cannot roll a traditional IRA into a SIMPLE IRA or a designated Roth account. Further, a Roth IRA can only be rolled into another Roth IRA.
Contact your IRA trustee to request a trustee-to-trustee rollover, also known as a conversion. You may have to fill out a distribution or account closing form, depending on whether you are moving the entire balance to the other account. You might also have to pay an IRA account closing fee.
Fill out the forms with your identifying information. Provide the institution name and the number of the "transfer-to" account.
Check with the "transfer-to" institution to confirm that the rollover was completed.
- If you roll a traditional IRA to a Roth IRA, you must pay income tax on the rollover amount by including it in income when you file your return.
- Alternatively, you can request the rollover funds by check and convey them yourself to the "transfer-to" institution within 60 days. If you miss the deadline, however, the IRS considers the transaction a distribution. Taxes and/or penalties may apply.
- If you convert a traditional IRA to a Roth, you'll pay taxes on the conversion, but at retirement age, principal and earnings can be withdrawn tax-free.
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