Transferring IRA $$

[mystang52]

I have "99%" of IRA $$ with Vanguard. I want to transfer a relatively small IRA I have with Ally to Vanguard, but it seems like Ally is making me jump through hoops while denying the transfer. I guess a workaround would be to just have the $$ sent to me as a distribution, and then redeposit with Vanguard immediately. If I go that route, how do I avoid the taxes? Ally would report a distribution; how would my contribution to Vanguard get recorded so no taxes would be due? Is this a simple, painless, transaction via Turbo Tax?

 

[GrayHare]

do the xfer process at the receiving brokerage (Vanguard), I've found it goes smoother that way

 

[cathy63]

I agree that having Vanguard start the transfer for you will probably work.

If that doesn't work for some reason, then you can redeposit the money in your Vanguard IRA within 60 days after receiving it, so you can simply have Ally send you the entire balance and then deposit it yourself. You must tell Vanguard that it is a "rollover" so they code the deposit correctly on their end.

You will get a 1099-R from Ally for the distribution. After you enter it into TurboTax, it will ask if any of these funds were rolled over and what type of account they were rolled into. You select that the rollover destination is a traditional IRA and enter the amount you deposited and then it will be treated as non-taxable.

You can only do a 60-day rollover once every 12 months.

 

[DrRoy]

+1 above.

 

[mrfeh]

Be aware that if you withdraw and deposit, the funds will be out of the market during that time. May or may not matter, depending on the investments.

I would ask Vanguard to pull the account.

 

[1242Vintage]

Years ago I did a DIY manual transfer from one retirement plan I was closing out to another. This wasn’t a distribution that would trigger taxes, just moving retirement funds around. Both had offices a few blocks from my office so I thought this would be quicker and easier. It was NOT!

I talked to the receiving plan and got exactly the wording they wanted on the check from the account I was closing. It was something like “For Benefit of ….”

Closed the account, had them print up a closing account statement and got the check from the plan that I was closing, made copies, and walked it over to the office of the new plan that will be receiving these retirement funds.

Got copies of deposit slips from the plan receiving the money along with an account statement that showed the deposit of exactly the amount on the check.

Thought all was good and life went on until months later I got the IRS audit letter along with a demand for $40k in unpaid taxes plus penalties!!! My wife opened the IRS letter and it scared the hell out of her. She called me at work in a panic.

Took me a few months and hours on the phone to clear up the IRS issue.

Lesson-learned. I’ll never do a transfer of retirement plan funds myself. I’ll jump through the hoops and let the plan administration folks handle any transfer of funds.

 

[Exchme]

Start at Vanguard. They have an on-line way to do this, but not every brokerage is listed and some are listed in technical ways that you may not be able to figure out, so you may have to call them. We've done this multiple times, it's always worked.

 

[jazz4cash]

do the xfer process at the receiving brokerage (Vanguard), I've found it goes smoother that way

This is how I would do it also. Cathy63’s suggestion (e.g. 60 day rollover) will work also. When I transferred IRA funds from Vanguard a long time ago they insisted on sending me a check so I instructed them to make the check payable to Fidelity, custodian For Benefit Of me. They mailed me the check which I forwarded to Fidelity. Since the check was not payable to me Vanguard did not record it as a distribution. At the end of the day it is a simple. TT transaction. If you have any distributions the software will ask if you rolled them over within 60 days. Also you can only use the 60 day rollover once every 12 months. Much of it is on the honor system.

 

[jebmke]

do the xfer process at the receiving brokerage (Vanguard), I've found it goes smoother that way

always