What is a transfer?

If you currently have assets in an IRA with another financial institution, you can have those assets transferred into a new or existing IRA generally without incurring any taxes or tax penalties by completing the appropriate form. Generally, a transfer must be between like IRAs (Roth to Roth or Traditional to Traditional). However, SEP IRA to Traditional IRA is also considered a transfer as is SIMPLE IRA to Traditional IRA after the SIMPLE IRA has been in force for at least 2 years.

Another way to look at it is, the type of plan is not changing, the type of funding is.

Reasons to consider a Transfer

• Expand your investment selection. The wide range of choices for a State Farm Traditional IRA, for example, provides investment flexibility to diversify your financial approach. Learn more on Funding an IRA.
• Adapt to new circumstances. A transfer is one way to adjust your investment mix to reflect changes in your investment goals, time frame, or performance expectations. And there is no limit to the amount of money or number of transfers that may be requested for an IRA.
• One provider for multiple financial solutions. A transfer lets you consolidate your savings with your State Farm agent, so you can continue working with someone who's already familiar with your needs.
• Consolidate and manage your retirement assets. The more accounts you have, the more difficult it is to keep track of your money. Consolidating your assets can make it simpler to track balances and monitor your withdrawals.

Characteristics of Transfers

• No IRA reporting is required by either the transferring or receiving company.
• A transfer is not a distribution so tax withholding is not necessary.
• The number of transfers a holder may request is unlimited for tax reporting purposes and may be for all or just a portion of the money.
• In other words, a transfer is not a withdrawal. What this means is that the IRS does not impose the usual distribution rules (and taxation), because the money is not used by the holder.