IRA outgoing transfer and rollover guide

ARTICLE TAKEAWAYS

  • Learn the differences between a transfer of assets and a rollover
  • Review the annual limit that applies to rollovers
  • How to move funds out of an IRA at Capital Group


Transfer and rollover comparison

A rollover and a transfer of assets are both ways to move money from one retirement account to another. The types of accounts involved, and whether the investor takes possession of the assets, will determine the type of move and tax reporting. 

This chart compares the differences between the types of moves.

Type of move 

Process 

Internal Revenue Service (IRS) tax reporting

Transfer of assets 

Assets are distributed and sent directly from one IRA to another IRA. 

None.

Direct rollover 

Generally, assets are distributed from a retirement plan. The rollover distribution is paid directly to another retirement plan. 

Direct rollovers are generally tax reportable but are not taxable. Form 1099-R is mailed by the sending firm the following year, and Form 5498 is mailed by the receiving firm after the tax-filing deadline.

 

Consult a tax advisor for more information.

Indirect rollover

Assets are distributed directly to the investor. 

The investor reinvests all or part of the distribution into the receiving account within 60 days of receipt. 

Indirect rollovers are generally tax reportable but are not taxable. Form 1099-R is mailed by the sending firm the following year, and Form 5498 is mailed by the receiving firm after the tax-filing deadline.

 

Consult a tax advisor for more information.


Annual limit

Only one IRA-to-IRA rollover per owner is allowed per consecutive-12-month period (beginning on the date the participant receives the distribution). The one-rollover-per-year limit does not apply to rollovers from traditional IRAs to Roth IRAs (conversions) or to rollovers from IRAs to employer-sponsored retirement plans.

There are no limits to the number of transfers.

How to move funds out of an IRA at Capital Group

Traditional IRA

 

Receiving account

Type of move
  • 401(k) 
  • 403(b)
  • 457(b)
  • Money purchase pension plan
  • Profit-sharing retirement plan
  • Thrift Savings Plan
  • Other qualified plans

Rollover (direct or indirect)1,2
  • Roth IRA

Conversion
  • Traditional IRA
  • SEP IRA
  • SARSEP (existing plans only)

Transfer of assets, rollover (direct or indirect)

Roth IRA

 

Receiving account

Type of move
  • Roth IRA

Transfer of assets, rollover (direct or indirect)


1 These plans are not required to accept IRA rollovers. Check with the receiving plan to confirm that the IRA rollover will be accepted.
2 Only pre-tax contributions in the IRA can roll over into a qualified plan. After-tax contributions must remain in the IRA.

Transfer of assets distribution

You may submit the receiving firm’s transfer of assets paperwork if the request is signed by the account owner and the new trustee and if the request is to make the check payable to the new trustee for the benefit of your client.

A signature guarantee is required for requests over $250,000. Review Signature guarantee for additional details.

IRA direct or indirect rollover distribution

For an indirect rollover distribution, the client can request the funds via the website or by phone or mail. Unless an exception applies, the transaction is reported to the IRS as either:

  • A normal disribution
  • An early distribution

If the client would like to roll over those assets to another institution, they must invest the proceeds within 60 days of receipt with the new institution. It is the receiving institution’s responsibility to report the investment as a rollover to the IRS.

For a direct rollover into another retirement account type, complete the IRA Rollover/Transfer Request. The distribution is reported to the IRS as a direct rollover.

 

Transfer to a non-retirement account at Capital Group

A transfer to an existing non-retirement account held with Capital Group can be processed by phone when:

  • The total distribution amount is no more than $250,000 per investor, per day
  • The IRA owner is also the receiving account owner
  • The Phone/Web Exchange option is on the sending account
     
Otherwise, submit the request in writing with a signed letter of instruction that includes:
  • Account owner’s name
  • Account numbers for the sending and receiving accounts (if applicable)
  • Federal or state withholding election
  • Distribution instructions (including the fund, share class and amount to redeem per fund)
  • Investment instructions (including the fund, share class and amount to be invested per fund)

A signature guarantee may be required. Review the guidelines for more information.

Timing

Outgoing transfers and rollovers are generally processed the same business day they are received, if all of the necessary information has been provided.

Reinvest a distribution

An investor may generally reinvest all or part of a Capital Group IRA distribution as a rollover back into the same account type within 60 calendar days of the date of receipt without a sales charge.

After 60 days, but within 90 days, an investor may reinvest a distribution without a sales charge, however the reinvestment is considered a personal contribution subject to IRA contribution limits and deadlines. For more information, review Right of reinvestment.

Related content

Traditional IRA tax information
Account activity email notifications
Understand your options for your retirement account brochure

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