Direct IRA Transfer
This entails your current provider sending us a check of your funds directly, for your benefit.
To get started, go to the Transfer page of your account and click "Rollover".
You'll answer a couple questions, and receive an email with the full, personalized instructions (how the check should be issued and where it should be sent) to complete your rollover.
Please note that Traditional funds must be rolled over into a Traditional IRA and Roth funds must be rolled over into a Roth IRA. If you aren't sure which type(s) of funds you have, contact your current provider or HR representative. You can always convert a Traditional IRA into a Roth IRA after the rollover.
To see if your retirement plan is eligible to be rolled over into a Roth or Traditional IRA, please check the IRS Rollover Chart. You can also check out our guide to retirement plans.
These instructions only apply if you'd like to roll your funds into a Betterment IRA. If you'd like to transfer funds into an existing Betterment 401(k) plan through your employer, please contact us at firstname.lastname@example.org for separate instructions.
The indirect rollover process involves withdrawing from your current IRA to a linked bank accoun and re-depositing the funds into another IRA within 60 days. The rule limits the use of an indirect rollover process to once per individual per 12 month period.
This method avoids any negative tax consequences and there are just two easy steps:
- Ask your provider for an early distribution with no withholding. Your provider may call it a "premature distribution", and this is the same thing
- Deposit that money into your Betterment IRA within 60 days to avoid tax penalties. Log in and go to the Transfer tab, select Deposit, then your IRA. Enter the amount of your rollover and select "IRA Rollover" for the contribution type:
Exceptions & Special Conditions:
- The 12 Month Rule. If you have used the indirect rollover method in the last 12 months, there could be further IRS restrictions. Let us know if this applies to you, and we'll walk you through a direct transfer.
- Note on Form 1040 at Tax Time. Note your rollover on Form 1040 using the 1099-R your old provider will give you when you file your taxes for this year. Betterment will not give you any tax forms, but will report your rollover contributions to the IRS directly in May on Form 5498.
- Same-Type Rule. You can only roll over between IRAs of the same type. A Traditional IRA, SIMPLE IRA or SEP IRA can only be rolled over into a Betterment Traditional IRA. A Roth IRA can only be rolled over another Roth IRA.
- Contribution Limit. Rollover contributions do not count towards your IRA contribution limit, since you're only moving over funds not adding to them.
- Simple IRAs. Note that you cannot roll out a SIMPLE IRA before you've held the account for at least two years, according to IRS rules.
- Spousal IRAs. Note that you cannot roll over a spouse's IRA into your Betterment account - your spouse will need to create their own Betterment account to roll their IRA into.
- Inherited IRAs and Annuities - If you are rolling over an Inherited IRA or a qualified annuity, we'll do a trustee-to-trustee transfer instead, to avoid negative tax consequences. Please contact us to get started. You can read more about rolling over inherited IRAs into Betterment here. To read more about this process and to find specific answers to your tax questions, refer to the IRS Publication 590.