You can transfer your IRA to another broker at any time, and in most cases the move costs you nothing in taxes or penalties. The safe way to do it is a direct trustee-to-trustee transfer, where the money goes straight from the old firm to the new one and never passes through your hands. The risky way is an indirect rollover, where you take a check and have 60 days to redeposit the full amount before the IRS treats it as a taxable withdrawal. Federal law under Internal Revenue Code Section 408 protects your right to move the account; which method you choose decides how much can go wrong.
Direct Transfer or Indirect Rollover
Pick direct. A direct transfer triggers no tax withholding, no once-per-year limit, and in most cases no Form 1099-R, because the IRS does not treat it as a distribution at all. An indirect rollover does the opposite on every count: withholding kicks in, you’re capped at one per 12 months across all your IRAs combined, and a missed deadline turns the whole balance into taxable income with a possible 10 percent early withdrawal penalty if you’re under 59½.
The rest of this guide assumes you’re doing a direct transfer. The indirect route is covered further down for the cases where you can’t avoid it.
Starting the Transfer at the New Broker
The process begins at the receiving firm, not the one you’re leaving. Open the account at the new broker first, and make sure the account type matches exactly. A Traditional IRA has to go into another Traditional IRA. A Roth has to go into another Roth. Moving between types isn’t a transfer at all; it’s a conversion, and conversions are taxable.
The new broker will give you a Transfer of Assets form, usually inside their online portal. Before you start filling it out, pull your most recent statement from the old broker and have these details in front of you:
- The exact account number as printed on your statement.
- The legal name and mailing address of the current custodian, which can differ from the brand name on the website.
- The account type: Traditional, Roth, SEP, or SIMPLE.
- Whether you want to move the full balance or only part of it.
Accuracy here decides whether the transfer goes through on the first try. If your name, Social Security number, or account number on the form doesn’t match what the old broker has on file, the request gets rejected or delayed. Cross-check every field against the statement before submitting.
How Long the Transfer Takes
Once the new broker has your signed form, they submit the request through the Automated Customer Account Transfer Service (ACATS), an electronic system run by the National Securities Clearing Corporation. ACATS moves stocks, bonds, mutual funds, and cash between participating firms without requiring you to sell anything. Your holdings generally land at the new broker in the same form they left.
The old broker has three business days after receiving the ACATS instruction to validate the request or flag an exception. Mismatched account information, outstanding margin balances, and unsettled trades are the usual reasons for exceptions. When nothing goes wrong, the whole process finishes in five to eight business days. Accounts with unusual holdings can take two weeks or more.
Assets That Can’t Come With You
Proprietary mutual funds and other products unique to your old broker are classified as nontransferable assets under FINRA rules. If the new broker doesn’t accept them, the old firm has to contact you for instructions. Your options are usually to liquidate the position (and receive cash, minus any redemption fees), leave the shares in a residual account at the old broker, or have the shares transferred directly to you. Some funds carry a back-end sales load or early redemption fee if you haven’t held them long enough; the old broker has to disclose those costs before liquidating.
Check the Cost Basis When It Arrives
After the transfer settles, the new broker sends a confirmation statement listing what came over. Verify the cost-basis figure on each security. Cost basis is what you originally paid, and it determines how much capital gains tax you owe when you eventually sell. If the numbers are missing or wrong, fix it immediately while both firms still have the records at hand. Reconstructing cost basis months or years later is tedious work.
If You End Up With a Check in Your Hand
Sometimes the old broker insists on cutting a check, or you’ve already received one before realizing a direct transfer was an option. From the day you receive the funds, you have exactly 60 days to deposit the full amount into a new IRA. One day late and the entire distribution becomes taxable income, plus the 10 percent penalty if you’re under 59½.
Watch the withholding. On an IRA-to-IRA distribution the default federal withholding is 10 percent, and you can waive it. On a distribution from a qualified employer plan like a 401(k), the plan administrator must withhold 20 percent before cutting the check, so a $100,000 rollover arrives as $80,000 and you have to make up the missing $20,000 from your own funds to complete a full rollover. You get the withheld amount back when you file your return, but the cash gap in the meantime surprises people.
The One-Per-Year Limit
The IRS allows only one indirect rollover per 12-month period, and the limit applies across all your IRAs combined. If you take a distribution from any IRA and roll it over within 60 days, you can’t do another indirect rollover from any IRA for 12 months from the date you received that first check. A second one inside the window gets treated as a taxable distribution.
Direct trustee-to-trustee transfers are completely exempt from this rule. You can move an IRA from one broker to another and move it again a week later with no limit and no tax hit. That exemption is the single strongest reason to use a direct transfer whenever you have the choice.
Missing the 60-Day Deadline
Under Revenue Procedure 2020-46, you can self-certify a waiver of the 60-day requirement by sending a letter to the receiving financial institution. The approved reasons are specific: financial institution error, a lost check, deposit into the wrong account, severe damage to your home, death or serious illness in the family, incarceration, postal error, foreign-country restrictions, an IRS levy whose proceeds were returned, delayed information from the distributing institution, or funds routed to a state unclaimed property fund.
Self-certification is not a guaranteed safe harbor. The IRS can still audit the rollover and reject the waiver. For situations outside the approved list, you can request a private letter ruling, but that process is slow and the filing fee runs over $10,000.
If You’re Taking RMDs
If you’re 73 or older and subject to required minimum distributions, a transfer does not satisfy your RMD for the year. Federal regulations treat a trustee-to-trustee transfer as not a distribution, so none of it counts toward what you’re required to withdraw. You still have to take the full RMD, either from the old account before the transfer or from the new account afterward.
Missing an RMD costs 25 percent of the amount you should have withdrawn, dropping to 10 percent if you fix the shortfall within two years. Coordinate with both brokers so the distribution actually happens during the transfer year. Many people find it simplest to take the RMD out of the old account before initiating the move.
Inherited IRAs Follow Different Rules
If what you’re moving is an inherited IRA, the rules tighten. A non-spouse beneficiary can transfer an inherited IRA to a new broker, but only through a direct trustee-to-trustee transfer. The 60-day rollover option does not exist for non-spouse beneficiaries. If a check gets issued and lands in your hands, the entire amount is generally taxable as ordinary income with no way to undo it.
The new account also has to be titled correctly, with both your name as beneficiary and the deceased original owner’s name, for example “Jane Smith as beneficiary of John Smith, deceased, IRA.” Wrong titling can cause the IRS to treat the account as fully distributed. Surviving spouses have more room: a spouse can either roll the inherited IRA into their own IRA or keep it as an inherited account. The 10-year distribution rule that applies to most non-spouse beneficiaries of owners who died in 2020 or later keeps running regardless of which custodian holds the account. Changing brokers does not reset the clock.
Tax Forms You’ll See
A direct trustee-to-trustee transfer between two IRAs generally produces no Form 1099-R, because it is not a distribution. The receiving broker reports the incoming amount on Form 5498, Box 2, which arrives by the end of May following the tax year of the transfer.
An indirect rollover generates more paperwork. The old broker issues a Form 1099-R. If the funds moved directly from an employer plan to an IRA, Box 7 shows Code G and the taxable amount is zero. If you received the funds personally and redeposited them, the coding differs, and you have to report the rollover on your tax return to show the IRS the money went back into a retirement account within 60 days. Reporting it wrong is one of the most common reasons for an unnecessary IRS notice.
Fees on the Way Out
Most brokers charge an account transfer or closing fee when you leave, typically $50 to $75, and more for accounts holding complex or alternative investments. Check your old broker’s fee schedule before starting. Many receiving brokers will reimburse transfer fees for new accounts above a certain balance, so ask the new firm whether they offer that credit before you move.