Transferring between T-IRAs

[friar1610]

For years my T-IRA was exclusively with Vanguard. Earlier in the year, Navy Federal Credit Union (NFCU) had a too-good-to-pass-up CD special so I decided to move some money from VG to NFCU to buy one. I filled out the proper forms, sent them to NFCU, they sent them to VG, VG sent the money to NFCU and eventually NFCU issued the CD. Took 3-4 weeks.

I've since opened a small share savings account with NFCU under the umbrella of the IRA. So I'm thinking I can use this in the future to buy CDs from NFCU in a more expeditious manner. Will I run into any potential problems if I do the following:

- do a withdrawal from my IRA from VG. Ask for a check to be mailed to me.
- endorse that check over to NFCU for deposit in my IRA share savings account, specifying that it's a ROLLOVER. I would be sure to do this within the 60 day rollover period.
- Once I've verified that the funds are in the IRA share savings account, do an on-line or telephonic purchase of the IRA CD. (I've done on-line CD purchases many times in my NFCU taxable account, so I know this part of it works).

Seems like this would be a simpler process. I suppose I could even circumvent the paper check route and have VG transfer the funds to NFCU electronically. But I'm thinking that having a copy of the check I endorse over as a rollover would be good to have in my file if there was ever a question about my intention.

Any potential pitfalls that anyone can see?

 

[RetireAge50]

I did the same thing about a month ago. Process took about a week for me. I faxed the Navy form, they faxed to Vanguard, and Vanguard wired the money to Navy directly into the IRA.

I had done what you described with the check earlier this year. I read somewhere this was limited to once per 12-month period or severe penalties so be careful.

 

[CardsFan]

Personally, I would do a direct transfer, like it sounds like you did before. If you want it done quicker, try a wire transfer. Yeah, it may cost $25 or so, but who wants the hassle of missing the 60 day window, for what ever reason. I would not take the risk.

FWIW, I also have a share account in my tIRA at NFCU. I transfer to that account, then into the CD I want. The NFCU form will allow you to transfer direct to a CD, but I like to know the the rate I expect is still there when I open it.

On a side note, I would consider leaving a few hundred in the share account. Then if a new add on CD opens, you can open it immediately with those funds. Just a thought.

 

[Onward]

I would do the direct, trustee-to-trustee transfer if at all possible.

The 60-day rollover method has too many things that could go wrong and cause the IRS to classify your rollover as a taxable distribution.

You can do only one 60-day rollover in a 365-day period.

 

[Carol1862]

Wait, you’re confusing me. I have a tIRA with Fidelity. I have transferred 3x this year money from that IRA to 3 different tIRA CDs at 3 different banks. I filled out the forms necessary and they handled the transfer. I was under the impression that as long as I didn’t cash these I was ok. I wasn’t doing a distribution. Are you saying I can only do this once a year

 

[CardsFan]

Wait, you’re confusing me. I have a tIRA with Fidelity. I have transferred 3x this year money from that IRA to 3 different tIRA CDs at 3 different banks. I filled out the forms necessary and they handled the transfer. I was under the impression that as long as I didn’t cash these I was ok. I wasn’t doing a distribution. Are you saying I can only do this once a year

Direct transfers are fine. I am not aware of any limit. The concern is getting a check payable to you that you then sign over to another tIRA.

Basically, this is a distribution, and then a change of mind.

 

[Carol1862]

Thank you for clarifying

 

[pb4uski]

I've done 3 transfers from our Vanguard tIRAs to Navy Federal over the last 7 months. Each was a direct transfer from Vanguard to the tIRA and took 1-2 weeks as I recall.

 

[friar1610]

Thanks, everyone, for your responses. The caution about using the rollover process is well taken.

And an excellent recommendation by CardsFan about keeping a stash in the share savings account to jump on any add-on offers! I've bought low-value "just-in-case" certificates in taxable in the past but hadn't considered setting myself up to be able to do so in the IRA.

One more question: when will NFCU have its next >3% deal?

 

[jazz4cash]

I have Fido issue a check payable to NFCU For Benefit Of me. I download the NFCU Direct Rollover (IRA) or DIrect Transfer (401k) form #624, fill it out and take it into a branch. This saves a week or so generally. I collect funds into an IRA share account or add on to an existing CD. I use the secure message system to move funds between accounts at NFCU. It is usually pretty efficient but calling late in the evening works well also. No matter what, it’s a PAIN.

 

[Onward]

There's no limit on the frequency of direct, trustee-to-trustee transfers.