The Internal Revenue Service allows you to do a tax-free transfer of money, securities or property from various retirement programs to a traditional IRA. You can do a rollover, transfer from one trustee to another, or transfer due to a divorce. Varying time limits apply depending on the transfer type.
Individual Retirement Account
An IRA is an individual retirement account. Traditional and Roth IRAs give participants a means to save for retirement that has many tax advantages. Depending on your circumstances, all or a portion of your contributions to a traditional IRA may be deductible. In addition, you are not taxed on the earnings and gains in either a traditional or Roth IRA. With a Roth, you are not taxed when earnings are distributed; with a traditional IRA, you are taxed when the funds are distributed.
You can set up an IRA with a mutual fund, bank, brokerage firm or life insurance company. These firms serve as the trustee for your IRA. For example, if you have your IRA at Bank of America, Bank of America is the trustee. If you transfer your IRA to TD Ameritrade, TD Ameritrade becomes the trustee. Therefore, this type of transfer is called a trustee-to-trustee transfer. Either you or your IRA's trustee can initiate the transfer. Because you don't receive any distributions, the transfer is tax- and penalty-free. There are no time limits for these transfers.
A rollover is a distribution of money or assets you take from one IRA that you contribute to another IRA. What you contribute to the second IRA is referred to as a "rollover contribution." There is a mandatory one-year waiting period between rollovers, so if you rollover one IRA to another, you must wait one year before you can rollover another. The IRS generally requires you to make the rollover contribution no later than 60 days after you receive the distribution from your IRA.
Transfers because of Divorce
When all or a portion of an IRA is transferred to you from a current or former spouse because of divorce decree or similar written documentation, this interest is considered yours from the transfer date. This is a tax-free transfer. Your spouse can do the transfer by changing the IRA's name from his name to yours. Alternatively, you can have your spouse request the trustee to transfer the IRA assets to the trustee of your new or existing IRA account. The IRS places no time limits on this transfer, but your divorce decree may. For example, the divorce decree may state that the transfer must occur within the next 90 days or by a specific date or event.
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