IRA to IRA transfer

Submitted by Jay Leiber on Wed, 2014-04-16 15:48

I have an IRA in the process of being transferred from existing
Custodian to new Custodian.

All but one “GNMA PASSTHROUGH” as been transferred plus a small amount of cash (from late dividends) is left. New Custodian says the remaining “GNMA PASSTHROUGH’ cannot be transferred because too small now (after years of principal re-payment). Total remaining market-value of “$20,000 GNMA” is about $200.oo. PLus about $30.oo cash left in account at this time.

MY QUESTION: After transfer coding has expired (or removed by old CUSTODIAN so sale can be made), should I have original Custodian sell above described GNMA and then transfer cash to new Custodian, by direction of old Custodian ? Must there be a “Transfer coding” in effect to make the delivery of cash to NEW CUSTODIAN ?

OR, should NEW CUSTODIAN make a new transfer-request to get the remaining cash instead of OLD CUSTODIAN simply sending it to NEW CUSTODIAN upon my instructions ? ( Or OLD CUSTODIAN sending the cash based on old transfer instructions ? )

OR

Would it be simpler to simply WITHDRAW the remaining cash from OLD CUSTODIAN account (About $200.oo) as part of this year’s “normal distribution”, plus take the total RMD from NEW CUSTODIAN during this year ? (Then including BOTH distributions as TOTAL DISTRIBUTION FOR 2014 on next year’s tax return ? )

Thank you for your reply — I am afraid of the many, many IRA rules which might cause problems with my IRA. I feel like ED SLOTT & CO. is the formost IRA expert in the Country, and I can depend on your answers.

Jay L.



Submitted by Alan - IRA critic on Wed, 2014-04-16 16:05

  • Under the RMD rules, if you are in an RMD distribution year, the first distributions in that year are automatically applied to your RMD. And you cannot roll over any distributions until after your RMD is satisfied for ALL your IRA accounts if you have more than one. However, direct trustee transfers can be done without limit and are none of the assets transferred are applied to the RMD for that year. Finally, you may have heard about the recent IRS ruling that you are only allowed one rollover (not transfers) for all your IRA accounts in a 12 month period instead of one PER IRA account. This is effective 1/1/2015.
  • Most IRA custodians will automatically transfer trailing dividends and other remaining balances in an IRA to the new IRA custodian or at least provide a check made out to the new custodian for the benefit of your IRA, which is sent to you to deliver.
  • In your situation, it might be easier to simply withdraw the remaining amount and apply it against your RMD if the follow up transfer will become a problem with your custodian. Then just reduce the rest of your RMD by the amount of the distribution you took to close the first IRA account. With respect to your total RMD for the year, you can take it from either custodian’s IRA or in part from both.
  • If 2014 is the year you will reach 70.5, remember that you have a one time option to delay all or part of your RMD to 4/1/2015. However, any distribution you take (for example the $200 remaining) is still considered to apply to your RMD and cannot be rolled over. Again, you can push for a complete transfer of all the remaining assets if you wish, but it would probably be easier to just take a distribution and apply it to your RMD because the $200 will have to come out anyway as part of your RMD.

Submitted by Jay Leiber on Wed, 2014-04-16 16:34

Thank you Alan for your FAST reply !    And thank you for answering all my questions !I am over 70, and in the “withdrawal stage”, so if any problems with transferring the cash, I will probably just take the remaining cash balance from OLD CUSTODIAN  as part of  this year’s  total  RMD, as you suggested. Jay L.

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