Roth to Roth IRA transfers vs rollovers

[Lakewood90712]

I'm a little confused, even after reading thr IRS FAQ's

I opened a new Roth IRA with a 2017 contribution , and intended to move in funds from a existing Roth at another custodian. The receiving custodian wants me to initiate the transfer from the old custodian by sending funds via bankwire to my new account at the new custodian.

Does this become a rollover with the one per 12 mo. limit ? or is it a custodian to custodian transfer , exempt from the 12 mo. rule ?

It's fuzzy on the issue of custodian to custodian transfer , because the transfer is not made to the receiving custodian.

PS why is it the governments business how many transfers we make. It's our money, not the custodians

[jazz4cash]

Yeah its fuzzy because rollover is used to mean different things. I think technically what you are describing is a direct transfer or trustee to trustee. It should not count against the one per 12 month limit. Make sure you don't accept any checks made out to you. My credit union failed multiple times to initiate the transfer so I finally took a check made out to the new institution as trustee.

[Sunset]

That is so weird.

I've only had the situation , where the receiving brokerage gets the information from me about what I want to transfer (specific shares, cash amount, or just the entire thing). Then the receiving brokerage handles it all and it all shows up.
Once the existing brokerage (the sender) did phone me to check I was moving, and of course to ask if they could do anything to keep me.

What if you want to transfer shares in kind - what would they do ? (doesn't bankwire mean only cash?)

[Onward]

The "one per 12 mo." limit applies only if you are given control of the funds on their way to the new custodian.

It's very strange that the new custodian wants a bank wire. There is an established electronic system for funds/securities transfers between custodians. It's called ACATS, and all custodians I know of use it.

Is this a self-directed Roth with a less-established custodian?

[Lakewood90712]

Quote:

Originally Posted by Onward The "one per 12 mo." limit applies only if you are given control of the funds on their way to the new custodian. It's very strange that the new custodian wants a bank wire. There is an established electronic system for funds/securities transfers between custodians. It's called ACATS, and all custodians I know of use it. Is this a self-directed Roth with a less-established custodian?

The move is from E trade self directed brokerage to a large regional credit union IRA cd. After a closer look , the credit union wants me to have an electronic check payable to me from e-trade sent to my account at the credit union new IRA account. I interpret this as not being a custodian to custodian transfer.

The last time I did a move, one brokerage to another, the new brokerage did everything, I didnt have to contact the old broker myself.

If I am reading the IRS rules correctly, IRS rules indicate the determining factor is who the funds are payable to in the transaction.

Should I get on the phone and tell the new custodian to get the transfer done, custodian to custodian or the money isn't going to them ?


As I age and get bogged down with eldercare duties, my ability to dig into the details , get service providers to do what is in the customers interest seems to be going in the wrong direction , at least in my opinion. Me being up at 3 am stressing about this , it's BS.

Rant over for now. To be continued, maybe.

Thanks for everyone's help and future help on this issue .

[bingybear]

Quote:

Originally Posted by Lakewood90712 have an electronic check payable to me from e-trade sent to my account at the credit union new IRA account. I interpret this as not being a custodian to custodian transfer.

I would guess this is not custodian to custodian as the E-check is in your name. Just my guess.

Why are you moving it? Could you purchase a CD at the broker with similar characteristics?

[jazz4cash]

I usually have the current custodian mail me a check made payable to the the new custodian "FBO my name". This works every time and I know the timing etc as the transfer proceeds. When I have transferred funds electronically or requested a check sent directly to the new custodian, I've had issues and delays. The credit union (NFCU)has good rates but I don't really trust them to get this right so I monitor closely.

[bingybear]

Quote:

Originally Posted by jazz4cash I usually have the current custodian mail me a check made payable to the the new custodian "FBO my name". This works every time and I know the timing etc as the transfer proceeds. When I have transferred funds electronically or requested a check sent directly to the new custodian, I've had issues and delays. The credit union (NFCU)has good rates but I don't really trust them to get this right so I monitor closely.

I believe you can only do this once a year.

[Lakewood90712]

Got it straightened out today. Had to talk to several people at the credit union call center . Does require a custodian to custodian transfer from with original signature , along with last statement from the firm where the money is coming from.

[jazz4cash]

Quote:

Originally Posted by bingybear I believe you can only do this once a year.

As others mentioned, as long as you do not get constructive receipt of the funds, it does not count against the once per year limit. It is a direct transfer, not a "rollover". That is why the check is made payable to "new custodian FBO account holder's name". Confusion arises because the term rollover is frequently used to apply to any transfer between custodians.

[jazz4cash]

Quote:

Originally Posted by Lakewood90712 Got it straightened out today. Had to talk to several people at the credit union call center . Does require a custodian to custodian transfer from with original signature , along with last statement from the firm where the money is coming from.

Great! Sounds like you are on the right track. I remain wary of the one I completed earlier this year after the credit union bungled it twice. I won't relax until I see how the 1099 is coded at tax time.

[Lakewood90712]

Quote:

Originally Posted by bingybear I would guess this is not custodian to custodian as the E-check is in your name. Just my guess. Why are you moving it? Could you purchase a CD at the broker with similar characteristics?

I have used short term brokered CD's in the past, but I want to go with 5 year and minimal penalty if I want to break it.

AFAIK , with brokered CD's , if you want to leave early, you have to re list it with the broker and are at the mercy of an offer. You could go easily go upside down , like selling a bond you no longer want.

[bingybear]

Quote:

Originally Posted by Lakewood90712 I have used short term brokered CD's in the past, but I want to go with 5 year and minimal penalty if I want to break it. AFAIK , with brokered CD's , if you want to leave early, you have to re list it with the broker and are at the mercy of an offer. You could go easily go upside down , like selling a bond you no longer want.

that would be a good reason. I guess I've just never cashed a cd early. So not a contingency I think of.

[bada bing]

Just as an aside, I have had experience with moving retirement accounts
from 2 regional Credit Unions and I personally will *never* deal with a credit
union for a retirement account again. The ones I dealt with just don't seem
to have much expertise in managing retirement accounts. In contrast, every
discount brokerage I've dealt with seems to be 100% on the ball and ready
to serve.