Can I Move My IRA to Another Company Without Penalty?

You can move an IRA from one company to another without owing tax or a penalty, and the cleanest way to do it is a direct trustee-to-trustee transfer, where the two firms move the money between themselves and it never passes through your hands. The IRS does not treat that kind of move as a distribution, so there is no tax, no early-withdrawal penalty, and no limit on how often you can do it.¹ The penalties people run into almost always come from the other method, the indirect rollover, where the old custodian sends the money to you first.

The Safe Way: Direct Trustee-to-Trustee Transfer

In a direct transfer, you open an account at the new firm and authorize it to pull your assets from the old one. The old custodian sends the funds or securities straight to the new custodian. Because you never receive the money, the IRS does not count it as a distribution at all.¹

Three practical advantages follow from that. There is no 60-day clock to miss. There is no mandatory tax withholding. And the one-rollover-per-year rule does not apply, so you can consolidate several IRAs or make multiple moves in the same year without triggering it.¹ For anyone whose goal is simply to change companies, this is the method to ask for by name.

The Risky Way: Indirect Rollover

An indirect rollover is what happens when the old custodian sends the money to you and you redeposit it. You have 60 days from the day you receive the distribution to get the full amount into a new IRA.² Every calendar day counts, weekends and holidays included. Miss the deadline or deposit less than the full amount, and the shortfall becomes a taxable distribution. If you are under 59½, add a 10 percent early distribution penalty on top of the income tax.³

Withholding is the second trap. The old custodian will usually withhold 10 percent of the distribution for federal income tax unless you specifically elect otherwise. On a $50,000 IRA, you receive $45,000. To complete a full tax-free rollover you still have to deposit the entire $50,000 into the new IRA within 60 days, which means finding $5,000 from other savings to cover the withheld amount. You get the $5,000 back at tax time, but only if the rollover was completed in full.

The third trap is frequency. You can only do one IRA-to-IRA indirect rollover in any 12-month period, and the limit applies across all of your IRAs combined, not per account.¹ A second indirect rollover inside that window is treated as a taxable distribution, with the 10 percent penalty added if you are under 59½.³ On a $50,000 distribution in the 24 percent bracket, that costs roughly $17,000 in combined tax and penalty. Direct transfers do not count against this limit, which is another reason to default to them.

If you missed the 60-day deadline for a reason outside your control, such as a financial institution error, a serious illness, a death in the family, a lost check, a postal problem, incarceration, or severe damage to your home, the IRS allows you to self-certify a hardship waiver using the model letter in Revenue Procedure 2020-46 and give it to the receiving institution.⁴ Self-certification is not automatic IRS approval, but it lets the new custodian accept the late deposit and gives you a defensible position if the IRS later asks.

How to Start the Transfer

Open the account at the new firm first, then complete its Transfer of Assets form. The form will ask for:

The full account number at your current custodian
The legal name, mailing address, and transfer department contact for the old firm
The account type (Traditional, Roth, SEP, or SIMPLE), because a mismatch will get the transfer rejected
Whether you want the whole account moved or a partial transfer of specific holdings or a dollar amount
Whether you want the assets moved in-kind (as-is) or liquidated to cash first

In-kind transfers keep your existing positions intact, but fractional shares of stocks and ETFs generally cannot move electronically between firms. The old custodian sells the fractional pieces and sends the cash along with your whole shares.

Some custodians require a Medallion Signature Guarantee, especially when the names on the two accounts don’t match exactly or the old firm is not on an electronic transfer system. A Medallion Guarantee is not the same as a notary stamp; you get one from a bank or credit union that participates in the program. Check whether your old firm charges a transfer-out or account-closing fee before you file the paperwork. Those fees typically run from $0 to $75.

How Long It Takes

Electronic transfers processed through the Automated Customer Account Transfer Service take about six business days from the point the new firm submits the request, assuming the paperwork is clean.⁵ Start-to-finish, including opening the new account and clearing up any issues, two to three weeks is typical.

Delays usually trace back to missing signatures, form errors, or extra verification the old custodian wants. Self-directed IRAs holding real estate or physical precious metals take longer because those assets require special custody arrangements. If the old firm does not participate in electronic transfers, there is no set timeframe. Once the assets arrive, check the new custodian’s confirmation statement against what you expected, and account for any dividends or interest that posted during the move.

Situations With Extra Rules

A few types of accounts and life events add restrictions on top of the general rules above. If any of these apply, the “just do a direct transfer” answer still holds, but there are additional conditions to check.

SIMPLE IRAs in the First Two Years

During the first two years after you begin participating in a SIMPLE IRA, you can only move the money to another SIMPLE IRA. Transferring it to a Traditional IRA, a Roth IRA, or any other account inside that window triggers income tax on the full amount plus a 25 percent early distribution penalty, higher than the usual 10 percent.⁶³ After two years, a SIMPLE IRA can roll into a Traditional IRA or an employer plan tax-free. If you are not sure when your two years started, ask your employer or the plan custodian before moving anything.

Inherited IRAs

If you inherited an IRA from someone other than a spouse, you can change custodians only through a direct trustee-to-trustee transfer. Non-spouse beneficiaries cannot use the 60-day indirect rollover method at all. If you take a check, the money is generally taxed as ordinary income and cannot be redeposited into an inherited IRA. Make sure the new account is titled as an inherited IRA so the withdrawal rules that apply to the inheritance are preserved.

If You’re Taking RMDs

At age 73 and older, you owe a required minimum distribution from your Traditional IRA each year, and the RMD itself cannot be rolled over into another IRA.⁷ Take the current year’s RMD before you move the rest of the balance. If you accidentally roll RMD money into the new IRA, it becomes an excess contribution subject to a 6 percent excise tax for every year it stays there.⁸ Coordinate with both custodians so the RMD comes out of one account or the other during the transition, not neither.

Divorce

Splitting an IRA under a divorce decree or separation agreement is tax-free only if it goes through the custodians as a direct trustee-to-trustee transaction or a transfer incident to divorce. The receiving spouse’s share becomes their own IRA going forward.² If you withdraw the money yourself and hand it to your ex, the IRS treats it as your taxable distribution, plus the 10 percent penalty if you are under 59½.⁹

Tax Forms You’ll Still Receive

Even a fully tax-free direct transfer generates IRS paperwork. The old custodian files Form 1099-R reporting the distribution from their end, and the new custodian files Form 5498 reporting the rollover contribution.¹⁰ You get copies of both. On a direct trustee-to-trustee transfer, the 1099-R should show a taxable amount of zero in Box 2a, or the “Taxable amount not determined” box checked in Box 2b. On an indirect rollover, the 1099-R shows the full distribution and it is on you to report the rollover on your tax return so the IRS sees that you completed it within 60 days.

Keep the confirmations, the 1099-R, and the 5498 with your tax records. The IRS can ask about a rollover years later, and matching paperwork from both custodians is the fastest way to close the question.

1
Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs)
2
Office of the Law Revision Counsel. 26 USC 408 Individual Retirement Accounts
3
Office of the Law Revision Counsel. 26 USC 72 Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
4
Internal Revenue Service. Retirement Plans FAQs Relating to Waivers of the 60-Day Rollover Requirement
5
U.S. Securities and Exchange Commission. Transferring Your Brokerage Account: Tips on Avoiding Delays
6
Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules
7
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
8
Office of the Law Revision Counsel. 26 U.S. Code 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
9
Internal Revenue Service. Filing Taxes After Divorce or Separation
10
Internal Revenue Service. Instructions for Forms 1099-R and 5498