Roth 2 Roth transfer

[Guest Azer]

Question ; (not been able to find it anywhere on the net)

Can you direct transfer a Roth from company "A" to company "B" without incuring any withdrawal penalty imposed by company "A"? Are there any set rules?

I was told that is common practice as a way to discourage asset movements? Is there any truth to that?

For the sake of consolidation, I would like to move my Roth to a much desired institution.

Thnx

[Appleby]

It depends. There is no tax penalty imposed for such a transfer. However, the financial institution from which the assets are being transferred may assess a penalty. For instance if the assets are in a certificate of deposit (CD), and the assets are being transferred before the CD matures, the bank may assess an early withdrawal penalty… This may also apply to some fixed investments, annuities and such.The only way to be sure is to check with the financial institution.

[Guest Azer]

Thank You

[John G]

I think I would call a custodian charge a "fee" to avoid confusion with IRS penalties on some withdrawals.

Direct custodian to custodian transfers are a better or safer option that withdrawing the funds and then rolling them over to a new (or other existing) account. Safer because you are not touching the funds and can not fail the 60 day rollover window. You also do not have an annual limit imposed on your transaction and you have your new custodian doing the admin work.

Here is how you do this. You go to the receiving custodian with the last statement from the "source" Roth or IRA (the one you want to transfer). The custodian usually has a relatively simple one page form to fill out with name, addresses, account number, etc. The custodian then makes a copy of your statement and attaches it to your transfer application and sends it to their IRA backroom. They handle all the details.

Fees charged by custodians..... Yes, custodians can and often will charge some kind of fee when you close out your IRA. Not just from early termination of a CD contract. Even if you are sitting on cash or a mutual fund that the new custodian will accept/support, they may charge to a termination fee. BUT, the good news is that many of the custodians to accept the transfer will give you a credit that may offset part or all of this expense. For example, in 2005 I combined three smaller accounts into one Schwab account and they credited me for the two "termination fees". Not all custodians do this, and you often have to ask or show a statement with the actual termination charge.

One final note: Be sure to note clearly if you want all your positions moved or liquidated before being moved. Some IRA/Roth custodians will liquidate your positions (and charge those wonderful commissions) if your wishes are not completely clear.

[Guest Azer]

Thank you kindly. Sure answers what i was looking for