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What is an IRA transfer?

It's a lot easier to invest with confidence when you have the freedom to move your money around retirement accounts.

Two people looking at paperwork at a desk

Over time, you might find the Individual Retirement Account (IRA) investment choices that made sense when you opened the account aren't working as well for you now. An IRA transfer is simply the process of moving funds between IRAs.

Why transfer an IRA?

You may want to move to a different type of investment, choose an investment that better fits your current needs and circumstances, or move your account to another fund or financial institution to keep your retirement and financial assets in one place.

A transfer is not considered to be a withdrawal for tax purposes, so there will be no reporting to the IRS and no taxes withheld. Generally, a transfer applies to IRAs of the same type: moving funds from an existing Roth IRA to another Roth IRA, or an existing Traditional IRA to another Traditional IRA. You can also transfer funds from a SEP IRA to a Traditional IRA or a SIMPLE IRA to a Traditional IRA, as long as you have had the SIMPLE IRA for at least two years

(Note: A transfer from a Traditional IRA to a Roth IRA is known as a conversion, and different rules apply. To calculate the impact of converting your Traditional IRA to a Roth IRA, visit this calculator.)

How does an IRA transfer work?

The process is simple. First, choose the account you want to transfer IRA funds to. It may be an IRA that you already have, or it may be a new one. Then, tell the new company that you want to transfer funds from an existing IRA, and give them the account details. The two companies will handle the transfer for you.

Some people are nervous about setting up a retirement account because they are afraid that they will make the wrong investment choices. The transfer privilege gives you confidence, because if your investment needs change, you can move your IRA with ease.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. State Farm makes no guarantees of results from use of this information.

Securities distributed by State Farm VP Management Corp.

Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Neither State Farm® nor its agents provide tax or legal advice.

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AP2020/01/0024




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