Quick IRA Question

[craigster59]

My Wife has a traditional IRA at a California credit union that has branches only in SoCal.

We have since moved to Arizona and opened up traditional IRA's at a local credit union. She wants to move her money from old institution to new institution. Bank guy says you close account and just ask for a check and then deposit it into new IRA.

The question is, is this part of the "60 day rule" and no tax liabilities will be triggered if deposited in that window or will she be taxed because she had "physical possession" of the funds? TIA.

[GH85Carrera]

There has to be a way the old bank can do an electronic transfer to the new in the year 2026.

The only catch is they may actually charge more to do a bank transfer which makes no sense to me.

[craigster59]

Originally Posted by GH85Carrera

There has to be a way the old bank can do an electronic transfer to the new in the year 2026.

The only catch is they may actually charge more to do a bank transfer which makes no sense to me.

That's what I was thinking but apparently my Wife was told the transfer can be done by a check made out to her. As long as she deposits it into a "like account" no tax liability would be incurred which sounded fishy to me.

[MBAtarga]

Fidelity cut my IRA check and sent it overnight to me. Then I overnighted it to my Financial Advisor and they deposited it into my Schwab account that they manage. Same thing was done for my wife's IRAs from Fidelity.

There was no transfer or wire option.

Craig - as long as you move it in the 60 day window there is no issue.

[wilnj]

Originally Posted by craigster59

That's what I was thinking but apparently my Wife was told the transfer can be done by a check made out to her. As long as she deposits it into a "like account" no tax liability would be incurred which sounded fishy to me.

From Google

The 60-day retirement rollover rule allows individuals to move funds from a California retirement plan (like CalSTRS or CalPERS) to another qualified account within 60 days of receiving a distribution without incurring taxes or penalties. Failure to deposit the full amount within this 60-day window results in the distribution being treated as taxable income, potentially with a 10% early penalty if under age 59½

I know this to be the case with Federal tax exposure but I wanted to check that CA didn't have a trap.

[wdfifteen]

I went through this.

https://forums.pelicanparts.com/off-topic-discussions/1045597-i-fought-law.html

A check is fine. There is a procedure for transferring directly, I don't remember the process, but you can do one check per year - easy peasy.

A couple of notes:

Try to get a memo line printed on the check stating that it is an IRA rollover.

Make sure the amount you deposit in the new IRA is the EXACT amount of the rollover check. You can add more later, but the rollover is safer from IRS mistakes if the withdrawal is exactly the same as the deposit.

Document, document, document

By law you can only do it by check once per year.

[craigster59]

Thanks for the info guys! The rollover is 6 figures, I just didn't want to give away money we'd saved for retirement and put myself in a higher earnings bracket.

[wilnj]

Originally Posted by craigster59

Thanks for the info guys! The rollover is 6 figures, I just didn't want to give away money we'd saved for retirement and put myself in a higher earnings bracket.

Life happens, don't let the 60 days sneak up on you. Make sure it's deposited and acknowledge in the new account ASAP.

[GH85Carrera]

Just send the check to me, and I will take care of everything!

[Tidybuoy]

I'm pretty sure that the original bank can transfer to the new bank. This will be considered a "rollover" IRA and to avoid any penalties on your end, the sending bank must make out payment to the new IRA.

[craigster59]

Originally Posted by Tidybuoy

I'm pretty sure that the original bank can transfer to the new bank. This will be considered a "rollover" IRA and to avoid any penalties on your end, the sending bank must make out payment to the new IRA.

This is what I thought was usually the case but when they said "Just have them cut a check and bring it in for deposit" my Spidey senses tingled.

I had always heard the minute the money was physically in your possession it was taxable and no turning back. Apparently an Old Wives Tale. Probably comes from "lunchroom/water cooler" investing advice.