What is an IRA Transfer?
The term IRA Transfer is used to describe a transfer of assets from one IRA to another IRA. An IRA Transfer from one financial institution to another via a trustee-to-trustee transfer is made tax-free and there is no tax liability.
How is an IRA Transfer accomplished?
There are 2 methods to transfer an IRA. If done properly, both methods result in a tax-free transfer of assets from one IRA to another IRA.
- Indirect Transfer (60 day rollover)
Assets from your IRA are paid to you in the form of a check. You then have up to 60 days to reinvest the money back into an IRA. If the assets are not reinvested within 60 days then taxes and IRS penalties will apply. You may execute only one 60 day rollover every 12 months per IRA account.
- Direct Transfer
A direct transfer is the movement of assets from one IRA directly to another IRA. Through a direct transfer you never take possession of your retirement assets. Instead, the trustee/custodian will transfer your IRA assets directly to the financial institution where your IRA is held. In most cases a direct transfer is a simpler and better option since it avoids having to comply with the 60 day rule and the possibility of incurring taxes and penalties that can occur if the indirect transfer isn’t executed properly.
Why consider an IRA Transfer?
There are several reasons for considering an IRA transfer. Some questions to ask yourself are:
- Am I receiving guidance and advice by a financial professional from the institution that holds my IRA?
- Am I pleased with the performance of my IRA portfolio?
- Would I like to increase the number of investment options available to me?
- Would I like to consolidate my various IRAs to improve the organization of my investments and make it easier to monitor my portfolio?
IRA Transfer with BCM
If you elect to transfer your IRA or retirement account/s with us, an investment professional would help you choose a portfolio that is based on your specific investment objectives. Since we have no proprietary products, our advice is objective.
Establishing your investment objectives for a new IRA account
The account/s transfer process would begin with a series of questions in order to gain an in depth understanding of your situation.
One of the most important questions will be to determine your investment objectives for your new IRA. For example, if you are retiring or nearing retirement you probably are primarily concerned with preserving and protecting the value of your IRA or retirement account/s and receiving monthly income. Conversely, if you have many years before retirement you probably are more concerned with selecting investments that can provide you with long term growth.
Designing your customized IRA portfolio
Your answers to following list of questions will have a significant impact on the portfolio that is recommended for you.
- What is your tolerance for investment risk?
- What is your time horizon before retirement?
- What type of investment experience have you had?
When the answers to these and other questions have been answered and there is a complete understanding of your current financial situation, the process of designing your portfolio will begin. Your new portfolio will be created by selecting from stocks, bonds, money managers and over 10,000 mutual funds.
There are very specific criteria and a stringent selection process that is used to determine each investment that is selected for a client's portfolio. In addition, there are a number of sophisticated diversification strategies that will be implemented in your portfolio to reduce your risk and volatility.