Dec 2


I want to move my Roth IRA from one trustee to another for private reasons.I requested the current trustee to rollerover the funds to the new trustee, but instead, I received a check via mail. I plan to send the check to the new trustee.
Are there tax consequences for receiving this check? Will IRS penalize the funds I am sending to the new trustee?
Thank you for your cooperation.

Best answer:

Trustee-to-trustee transfer of your Roth IRA – Is it a tax-free transaction?

Are you thinking of transferring your Traditional IRA from one trustee to another? If answered yes, you must be facing a plethora of questions regarding the charges and the taxes that you may have to pay for the entire transaction. Well, for all those baby boomers, who have been bad at managing their finances, it is always advised that saving money in a retirement account like a 401(k), 403(b) or a Roth IRA account is necessary to avoid debt.  Though debt consolidation options are there to help the seniors get out of debt but savings is always the best way to stay on top of your finances. With the present unemployment rate hovering around stubbornly at the 9% rate and the high level of dissatisfaction of the people with their salary structure, most people frequently change jobs to boost their income. In such a situation, what happens to their Roth IRA accounts? What if someone wants to transfer the entire account to the new trustee? Read on to educate yourself on some solved doubts on Roth IRA conversion.

Are the Roth IRA rollover rules changing?

Since its December, 2011, its time to implement some changes in the Roth IRA conversion rules. But before addressing the rules on the conversion, let’s have a look at the rules that entail the Roth IRA rollover from one trustee to another. If you want to complete a successful Roth IRA rollover, you have to follow certain things like:

You need to own a well-established Roth IRA account
Your income should be within the limit of the Adjustable Gross Income (AGI) under the limits of the IRS
You have to pay taxes if necessary
Move the distributions from one trustee to another or from one qualified plan to another within 60 days.

A simple guide to a trustee-to-trustee transfer of your Roth IRA account

Most people are confused about the tax reporting process on the transferring Roth IRA accounts. If you’re executing a company-to-company transfer of your Roth IRA account, the IRS does not require you to report the transaction. However, if the transfer is reported as a rollover, it needs to be reported to the IRA. A rollover is when you take out the entire fund from one custodian’s account and transfer it to yet another one. This entire process should be done within 2 months and what matters to the Internal Revenue Service (IRS) is the process in which the funds are conveyed from the old trustee to the new one. Here are some steps.

Start a new IRA account: When you’ve chosen your new trustee or custodian, you’re supposed to open a new IRA account. You may choose a brokerage, company or even a bank.
Ask the custodian to initiate a transfer: Your next job is to ask your new custodian to set off a trustee-to-trustee transfer from your Roth IRA account. You may need to fill out a form where you may have to give the information about your old Roth IRA account, its name and account number.
Opt for the trustee-to-trustee transfer: Instead of choosing the rollover option, you should choose the trustee-to-trustee transfer option. In the direct transfer method, the old IRA trustee transfers the money to your new trustee instead of giving you a check.
Verify with your new trustee: After the funds are transferred, you should check with the receiving trustee for getting the verification of the completed deal. They should get in touch with the old company on your behalf.
Decide the new investment options: Soon after your funds are transferred to the new trustee, you should choose the new investment options to maximize your benefits. You need not report the Internal Revenue Service (IRS), because the funds had sidestepped you and were deposited directly to your new account.

So, if you’re wondering about the ways in which you can transfer your Roth IRA account to another trustee, you should go through all the above mentioned points. If you’re simply transferring the amount, you need not worry about reporting to the IRS.

Jason Holmes is a regular writer with and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.

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