IRA incoming transfer and rollover guide

ARTICLE TAKEAWAYS

  • Learn the differences between a transfer of assets and a rollover
  • Review the annual limit that applies to rollovers
  • How to move funds into an American Funds IRA
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Transfer of assets and rollover comparison

A rollover and a transfer of assets are both ways to move money from one retirement account to another. The types of accounts involved, and whether the investor takes possession of the assets, will determine the type of move and tax reporting.

This chart compares the main differences between the types of moves.

Type of move

Process 

Internal Revenue Service (IRS) tax reporting

Transfer of assets 

Assets are distributed from one IRA to another IRA. The transfer is made from one trustee/custodian to the other and the investor does not take receipt of the assets.

None. 

Direct rollover 

Generally, assets are distributed from a retirement plan or IRA. The rollover distribution is paid directly to another retirement plan or IRA. The investor does not take receipt of the assets.

Rollovers are generally reportable, but not taxable. Form 1099-R will be mailed by the sending firm the following year, and Form 5498 will be mailed by the receiving firm after the tax-filing deadline.

Consult a tax advisor for more information. 

Indirect rollover 

Assets are distributed directly to the investor. The investor reinvests all or part of the distribution into the receiving account within 60 days of receipt. 

Annual limit

Only one IRA-to-IRA rollover per owner is allowed per consecutive 12-month period (beginning on the date the participant receives the distribution). The one-rollover-per-year limit does not apply to rollovers from traditional IRAs to Roth IRAs (conversions) or to rollovers from employer-sponsored retirement plans to IRAs.

There are no limits to the number of transfers.

How to move funds into an American Funds IRA

Sending account

Type of move
  • 401(k)1
  • 403(b)1
  • 457(b)1
  • Money purchase pension plan (MPPP)
  • Profit-sharing retirement plan (PSRP)
  • Thrift Savings Plan (TSP)
  • Other qualified plans

Rollover (indirect or direct)
  • Traditional IRA 
  • SEP IRA 
  • SARSEP 
  • SIMPLE IRA2
  • SIMPLE IRA Plus2

Transfer of assets, rollover (indirect or direct)

1Roth 401(k)/403(b)/457(b) contributions can only roll over to a Roth IRA.
2The account owner may only transfer assets two years after their first contribution.

Ineligible assets:

  • Required minimum distributions (RMDs) cannot be rolled over into an IRA
  • Inherited IRAs generally must be distributed to the investor or stay in the inherited IRA. However, if the owner of the inherited IRA is the spouse of the original owner, exceptions may apply.


Direct rollover from an employer-sponsored retirement plan

Most employers will require that the employee complete a distribution request form to ensure they are eligible to make the distribution. These forms:

  • Are obtained from the employer
  • Usually require the account number of the accepting account if the funds are being transferred directly to the American Funds IRA


If the IRA does not already exist, submit the Traditional/Roth IRA Application prior to requesting the distribution from the employer so that the new account number can be provided to them.

If the funds were previously invested in American Funds, our IRA rollover pricing policy may allow the funds to be invested at net asset value (NAV). Refer to Share classes and breakpoints for additional information.

Transfer from external IRAs

Contact the resigning trustee or custodian regarding their requirements to transfer the funds to American Funds. If the resigning custodian:

  • Requires their own transfer forms:

o  Instruct them to mail us a check payable to Capital Bank and Trust Company (CB&T) and include:

  • The name of the account owner
  • The American Funds account number

o  Contact us to provide us with investment instructions for the incoming funds.


If the receiving account is new, make sure that the account is established before a check is mailed to us. If we receive the check before the account is established, we may have to return it.

Transfer from existing American Funds traditional, SIMPLE or SEP IRAs or SARSEPs

We can accept a phone request in cases where the sending and receiving accounts have the same:

  • Tax identification numbers (TINs)
  • Dealer firms and financial professional
  • Beneficiary information


However, you must submit by mail when:

  • The sending and receiving accounts are different in any of these areas
  • The receiving account is new


Note: For SIMPLE IRAs, the two-year participation period must be met before the assets can be transferred.

Indirect rollover from employer plan or IRA

If the proceeds were issued directly to your client, they must send a check payable to Capital Bank and Trust Company.

If the receiving account exists, complete the Indirect Rollover Request and mail it to us with the client's check.

If the receiving account is new, mail the client’s check to us with the application.

Note: Rollover contributions cannot be submitted via Automated Clearing House (ACH).

Timing

Incoming rollover and indirect rollover requests that include a check are generally processed the same business day if all of the necessary information has been provided.

Incoming transfer requests that do not include a check are processed within 1-3 days after all of the necessary documentation is received.

The request is then sent to the resigning institution for a transfer of funds. Processing time varies based on the firm; however, if the assets are not received within 30 days, a second system-generated request is sent.

Note: To avoid delays, contact the resigning firm prior to submitting the transfer request to ensure their requirements will be met. If the resigning firm has not sent the distribution check after the second request, your client should contact the resigning trustee to inquire on the status. Distributions may be delayed or rejected if the resigning trustee needs additional information.

 

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The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.

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