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Tips on How to Manage The IRA Transfer Process

After you decide that a self-directed IRA with a custodian like Sunwest Trust is the best option for you, then you may be asking yourself just what is your next step to being fully self directed? First, you must determine whether you can transfer your IRA to a custodian like Sunwest Trust. If you have a Traditional or a Roth IRA with an existing custodian, then you can transfer as much or as little of your funds as you would like to start your new account and begin investing in the investments you want.

Note: If you plan to transfer a traditional IRA transfer into a Roth, then you need to be smart about how you handle this since this will trigger a taxable event. Your CPA or financial advisor should be able to help you navigate this situation based on your financial situation.

Steps For a Direct IRA to IRA Transfer

Once an account has been established at Sunwest, there is some minor paperwork involved in the transfer process. At Sunwest Trust, all that we require is a single-sided transfer form with easy to follow instructions. You will need to download the form, complete the form and send it to us either by mail or by fax. For help completing the transfer form, watch our detailed 5-minute video on how to complete an IRA transfer form.

Note: The form tells your current custodian this is an existing IRA to new IRA transaction. The form instructs them to transfer a number of funds that you specify over to us. We will in-turn sign the form on behalf of your IRA and forward the document to your original custodian the get the transfer started.

Note: In many cases, we are transferring large amounts of money and if you are transferring from a traditional brokerage that originally would not allow your to purchase alternative assets, then you will have to liquidate your current assets before the funds can be placed in your new account. This is not the case; however, for an in-kind transfer process. The procedure may take up to a week or two, especially in the case of an in-kind transfer, so make sure to factor that into the timing of your investment strategy. This time is needed for everyone’s security, both for the custodians and the clients, alike.

Transferring to an IRA From a Former Employer

Another option you might consider is transferring a 401(k) to an IRA. If your 401(k) was with your previous employer, then transferring to an IRA is possible. In this case, the method would be what is known as a Direct Rollover, which will let you put your 401(k) funds into a new IRA and start directing your own investments. For more information, contact Sunwest Trust.

In-Service Distribution Option

What about a 401(k) with your current employer? Can it also be transferred into an IRA? Here is a little-known secret that you may have never heard before. If you have a 401(k) plan with your current employer, then it’s a little more complicated, although not impossible to graduate a truly self directed option. However, it is going to solely depend on your 401k administrator and you will need to do a little more bit of legwork to pull off the transfer.

First, you would need to speak with your current plan administrator and inquire if the plan allows for what is called an In-Service Distribution option. Depending on the guidelines set up by the plan administrator, you may be able to rollover a portion or all of the funds in the 401(k) into an IRA, and they should provide you with the form for the distribution and they can send it over to us.

If the 401(k) plan does not have a provision for an In-Service Distribution, then you will not be able to transfer your funds into an IRA until you are no longer employed by your current company or the plan’s rules change. Perhaps, you can lobby the administrator of the plan yourself to get the rules changed. 🙂

Many of us have the freedom to choose our custodian. If you choose to direct your own IRA, then the process is straightforward and requires very little paperwork.

If you decide an alternative IRA plan is right for you, then contact us and we will step-by-step guide you through the entire IRA transfer process.

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Terry White

About Terry White

I started my business career after getting my degree in Accounting from the University of New Mexico in 1983. My first job was as a controller for a local title company, and in 1987 I started First Financial Escrow, Inc. Over the years I played a part in several startup companies including First Financial Equities, Inc., First Financial Trust, Inc., First Financial Marketing, Inc. and Asset Ventures, Inc. In 1997 First Financial Escrow, Inc. was able to purchase the escrow accounts from Sunwest Bank and changed its name to Sunwest Escrow. As the market changes, Sunwest has grown and changed along with it. Besides my wife, Sheila, we have three boys, two daughters-in-law, one grandson, another grandson on the way and a future daughter-in-law. Sunwest is my passion, and I enjoy coming to work every day to see what will happen next. I enjoy fly fishing, spending time in Colorado, biking and watching my boys play soccer.