Answers to common questions when rolling over or transferring a retirement account
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 you take possession of the assets, will determine the type of move.
A transfer of assets
The money/assets in the account are withdrawn from one IRA and sent to another IRA for the same account owner. The transfer is made directly between one custodian/trustee and the other. A transfer of assets is not tax-reportable, so it will not be included on the tax forms you receive for the year.
Direct rollover
Generally, assets are distributed from a retirement account, like a 401(k) or IRA. The rollover distribution is paid directly to another retirement account or IRA. Rollovers are tax-reportable. You will receive a Form 1099-R from the resigning custodian/trustee reporting the distribution and a Form 5498 from the receiving custodian/trustee reporting the investment.
Indirect rollover
Assets from a retirement account, like a 401(k) or IRA, are distributed to you (for example, the resigning custodian/trustee sends a check made payable to you). You can reinvest all or part of the distribution into the receiving account. Rollovers are tax-reportable. You will receive a Form 1099-R from the resigning custodian/trustee reporting the distribution and a Form 5498 from the receiving custodian/trustee reporting the investment.
The Internal Revenue Service (IRS) allows one indirect rollover from an IRA to another (or same) IRA in a 12-month period, regardless of the number of IRAs owned.
Note: Assets must be reinvested within 60 days of receipt to avoid taxation. Any portion not reinvested may be taxed as a normal distribution.
Rollovers are generally tax-reportable but not taxable. Form 1099-R will be provided by the sending custodian/trustee reporting the withdrawal from the account. The receiving custodian/trustee will provide Form 5498 reporting the amount invested. Generally, you will receive Form 1099-R by January 31 of the year following the rollover. Form 5498 is not required for tax filing and is generally provided by May 31 of the year following the rollover.
Transfers of assets are not tax-reportable, so no tax forms are generated or sent to you.
It depends. Generally, amounts already invested in American Funds in an employer-sponsored retirement plan can be rolled over into an IRA invested in American Funds without paying an upfront sales charge.* Any amount held in investments other than American Funds will be subject to applicable sales charges.
A one-time $10 setup fee will be deducted from your account when you open a CB&T IRA at Capital Group. There is an annual custodian fee (currently $10).
* A copy of your retirement account statement showing the portion of your account invested in American Funds must be provided at the time of the rollover or transfer to waive the sales charge.
Only one IRA-to-IRA indirect rollover per owner is allowed per consecutive-12-month period (beginning on the date the participant receives the distribution).
The 12-month limitation does not apply to rollovers from a qualified plan, for example, a 403(b) or 457(b).
There is no limit on the number of transfers of assets that can occur in a 12-month period.
No. Roth contributions need to be rolled over into a Roth IRA. Any pre-tax contributions can be rolled over into a traditional IRA. For more information, go to Open an account.
Yes, if the plan permits them to be rolled over. It is the IRA owner’s responsibility to track any after-tax contributions, as they incur different tax treatment when withdrawn. Consult a tax advisor for additional details.
No, however the amount not rolled over within 60 days of being distributed may be subject to taxes and penalties.
Pre-tax money that is withdrawn from a retirement account before the age of 59½ and is not rolled over may be subject to ordinary income taxes and an additional early-distribution tax penalty, unless certain exceptions apply.
If not rolled over, non-Roth after-tax contributions can be distributed tax-free, but earnings are taxable. Qualified distributions from Roth 401(k) or Roth 403(b) accounts are tax-free. However, the earnings portion of nonqualified Roth distributions is taxable.
Consult a tax advisor for additional details.
We will send your transfer request to the resigning custodian/trustee once all required information is received.
The processing time of the resigning custodian/trustee can vary based on the firm. If the transfer assets are not received after 30 days, we send a reminder letter to the custodian/trustee.
Company retirement plan rules can vary, but most follow the same general guidelines. If your account has a lower balance, your plan may be able to automatically cash you out or roll your balance into an IRA selected by your former employer. Those with higher account balances may be permitted to leave their balance in the plan. However, you will not be able to continue contributing to the account and may be subject to any restrictions or rules of the plan. For more details, go to What should I do with my 401(k)? and contact your employer or account custodian/trustee.
We recommend you contact your employer or the account’s resigning custodian/trustee for any forms or instructions they require.
You will need to include your Capital Group IRA account number on the request and provide instructions for how you want the money invested.
Note: If you are rolling over into an IRA, any money in a Roth 401(k) or Roth 403(b) account must be rolled over into a Roth IRA.
Non-Roth accounts can be rolled over into a traditional IRA or Roth IRA. Rollovers from non-Roth accounts to Roth IRAs are taxable. If you do not have an existing account, go to Open an account.
We recommend you contact the account’s resigning custodian/trustee for any forms or instructions they require.
You will need to include your Capital Group IRA account number on the request and provide instructions for how you want the money invested.
If you want Capital Group to initiate the transfer, or if the resigning custodian/trustee requires Capital Group sign/acknowledge they will be the accepting custodian/trustee, you can complete and return the Request for Transfer of Assets or Direct Rollover (PDF).
To roll over money received from a retirement account into your CB&T IRA at Capital Group, complete the Indirect Rollover Request (PDF). Mail it with a check payable to Capital Group or Capital Bank and Trust for the rollover amount to your nearest service center.
Note: Assets must be reinvested within 60 days of receipt to avoid taxation. Any portion not reinvested may be taxed as a normal distribution.
Yes. After-tax or Roth contributions from an employer’s plan can be rolled over directly into a Roth IRA tax-free.
If you roll over non-Roth assets to a Roth IRA, while you may not be required to withhold taxes, the amount rolled over will be included in your gross income for federal and/or state income tax purposes.
Yes. You can continue to save for retirement by contributing to your IRA as a single contribution or by setting up recurring automatic contributions.
Yes, provided you take your required minimum distribution (RMD) from the plan or IRA before you roll over the money. The money you receive for your RMD is not eligible to be rolled over.
Yes, but you must do so within 60 days of receiving your distribution to keep the tax benefits.
Complete the Indirect Rollover Request (PDF) and mail it with a check, payable to Capital Group or Capital Bank and Trust, for the rollover amount to your nearest service center
Note: Your employer may have withheld a portion of your distribution for federal and/or state income taxes.
If you replace this withholding amount and send a check for the total amount withdrawn from the account, you can roll over the entire amount of your distribution. The IRS will apply the amount you replaced for the withholding toward your tax liability for the year. If applicable, you’ll get the withholding amount back from the IRS when you file your taxes.
If you roll over the distribution amount you received without replacing the withholding portion, the amount withheld could be considered a distribution subject to taxes and possible penalties. Consult a tax advisor for additional details.
It depends on whether your current employer’s retirement plan accepts rollovers. Check your plan’s documents or Summary Plan Description (SPD) and talk to your plan’s financial professional to see whether the plan accepts rollovers.
If it does, we recommend you contact your former employer or the account’s custodian/trustee for any forms or instructions they require.
Retirement account money can be rolled over to your IRA. We recommend contacting your former employer or the account’s custodian/trustee for any forms or instructions they require.