Make sure you know where you want to send your money before you do it.
You probably already know that in order to use an individual retirement account, you have to decide where your money will be invested. A "custodian" is a person who looks after your investments. Most of the time, you should choose a safe custodian. Mutual funds, savings accounts, and bonds are some of the most common ones. Even though you should be careful about who you pick to handle your retirement account, don't worry! You don't have to keep the same investment until you reach retirement age.
But unlike a normal investment, you can only move or "roll over" your retirement account once a year. Also, you have to follow some rules that are very clear. Before you start putting money into a retirement account, it's usually a good idea to learn how to move it. So, if you ever need to do a rollover, you'll know how to do it.
Before you start the rollover process, you should probably have a good idea of where you want to invest the money. This is because you only have 60 days to put the money in the new custodian fund after you take it out of the original IRA custodian. If you take too long, you'll have to pay a big penalty tax, which is definitely not worth the few days you take longer.
Keep in mind that you will need to report a rollover at the end of the year. You should keep track of who is in charge of your individual retirement accounts and how much money is in each account, just like you would with any other part of your finances.
If you are only moving a small amount of money from one IRA to another, you might not even have to report the transfer. Also, there is no tax on these transfers. This is a good idea if you don't want to move all your money from one custodian to another, but you do want to change the amount of money in each IRA.
