Definition
A nonreportable movement of assets between retirement accounts of the same type. Generally, transfers occur between:
- Two traditional IRAs
- A traditional IRA and a SEP IRA
- From a SIMPLE IRA to a traditional IRA or SEP IRA, providing the SIMPLE has satisfied the two-year requirement
- Two SEP IRAs
- Two SIMPLE IRAs
- Two Roth IRAs
- Two HSAs
- Two ESAs
- Two qualified plans, where both qualified plans are maintained by the same employer. The terms of the movement of assets would determine if it is a transfer or a distribution & rollover.
Note: For these transactions (above) the trustee-to-trustee transfer is a nonreportable transaction, which means that no 1099-R or 5498s are issued for the transaction.
See caution in footnote:[1]
Referring Cite
Additional Helpful Information
- Non-reportable transfers usually occur directly between financial institutions, with the assets paid by the delivering financial institution to the receiving financial institution- for benefit of the retirement account. These transfers between accounts can occur for an unlimited number of times during any period. This is unlike rollovers between IRAs, where only one distribution can be rolled over from an IRA to another IRA ( of the same type) during a 12-month period. For this purpose, ‘same type’ means:
- traditional IRA to a traditional or SEP IRA;
- a SEP IRA to a traditional IRA or another SEP IRA,
- a SIMPLE IRA to another SIMPLE IRA or to a SEP or traditional IRA after the two-year period.[2].
- See trustee-to-trustee-transfer for more information
- If an IRA owner is of RMD age, the IRA can be transferred and the RMD can be taken from the receiving IRA [3]or the delivering IRA. Either is OK. Under the old rules, the RMD had to be left behind and taken from the delivering IRA or taken before the transfer.
- A transfer is nonreportable and is not subject to the tax-withholding rules
[1] Some IRA owners may want to ‘expedite’ transfers by having the delivering financial institution give them a check for the amount, instead of waiting for the transfer to be completed between the two financial institution- as such transfers can take days or weeks, depending on the type. Individuals who opt to have the check given to them should exercise extreme caution when the check is requested. This is even more important for inherited IRAs, as irreversible can occur when transfers are erroneously processed as distributions.
[2] Revenue Ruling 78-406
[3] Treas. Reg. 1.408-8, Q&A-8
