Diret Transfer of IRA
I have several IRA accounts. One with Bank A, another with Investment Company X and another with Investment Company Y. They are all traditional IRA’s. I am thinking of consolidating and I would like to transfer my IRA with Bank A to Investment Company X. I have a 72T Plan with Investment Company Y that started in March 2022 and will end in March 2027.
My questions or concerns are: Should I wait for my 72T Plan with Investment Company Y to end in March 2027 before I do the transfer of my IRA with Bank A to Investment Company X? Or I can do it anytime since the transfer will not involve the Investment Company Y from where I have my 72T Plan? I worry that it might trigger an audit of all of my IRA’s if I do a transfer while my 72T Plan is ongoing. Do you think it will trigger an audit if I do the transfer?
I understand that since it is a Trustee to Trustee transfer, this transaction will not be taxable, though I will receive a 1099R and a 5498 form, please confirm if this is correct.
I am looking forward to your prompt reply. Thank you and have a great day!
Permalink Submitted by Alan - IRA critic on Thu, 2024-08-15 17:04
Direct transfers between IRAs are not reportable. There will be no 1099R or 5498 issued.
If your 72t plan calculation was only done using the balance in Co Y, you can do transfers between other IRAs without an issue. What you cannot do is move any balances between Co Y and the other accounts, as that would bust the plan.
Permalink Submitted by Nelie Cruz on Mon, 2024-08-19 12:57
How come Company X told me that they will issue form 5498 and that Bank A will issue form 1099R? It is good that I consulted you because what they told me was different. Is there any site where I can go to and print the rules regarding direct transfers so that I can send the rules to both Bank A and Company X before I do the transfer? I just want to make sure that both Bank A and Company X know what they are doing, so that I will not have any problem later on with the IRS.
I really appreciate your help on this. Thank you so much!