What Is A Trustee-to-Trustee Transfer?

by JD Miller on June 21, 2011

JD Miller CPA
The Trusted Financial Planner

A trustee-to-trustee transfer is a direct IRA rollover where the funds go directly from one of your IRAs to another of your IRAs. It is sometimes called a direct transfer.

Direct IRA rollovers allow you to make as many transfers as you want to from one IRA to another, from one Roth IRA to another, without worry about either the 60-day rule or the “once-per-year” IRA rollover rule.

Because you never have to worry about these two rules, you don’t have to worry about inadvertently triggering income taxes or penalties on the amounts you transfer from one IRA to another or from one Roth IRA to another.

Note that there are different rules for transfers from your regular IRAs to your Roth IRAs.

You should ONLY USE trustee-to-trustee transfers when you transfer your money from your regular IRA to your Roth IRA. This is called a “Roth conversion”.

You can and you should use trustee-to-trustee transfers when you transfer your money from your Roth IRA to your regular IRA. This is called a “recharacterization”.

Not knowing the Roth IRA transfer rules could cause you to trigger potentially HUGE income taxes and penalties.

Protect yourself. Get the help of a CPA or other tax advisor who knows the trustee-to-trustee rules and the Roth IRA transfer rules.

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{ 2 comments… read them below or add one }

carolyn schiele February 4, 2015 at 6:35 pm

I received no distribution from an annuity in the year 2014, but did receive a 1099-R indicating distribution of the entire account. This in spite of the fact that all my quarterly reports for the year show no withdrawals and also show all the money is still in the account. What might have triggered this?

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JD Miller February 4, 2015 at 6:56 pm

Replied by email.

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