When transfering IRA ask origin or destination institution?

Question

I have some money in an IRA account with NEW YORK LIFE. I would like to transfer this money into a Fedelity brokerage account since I can buy individual stocks there. Who do I contact to arrange the transfer NEW YORK LIFE agent or Fidelity customer support? My NEW YORK LIFE agent said she is not able to help me and I would have to ask Fidelity but I don't know if she is bull shitting.

Answer 1

The easiest way to do move money from one IRA account to another IRA account is by a trustee-to-trustee transfer where the money goes directly from one custodian (New York Life in this case) to the other custodian (Fidelity in this case). The easiest way of accomplishing this is to call Fidelity or go online on their website, tell them that you are wanting to establish an IRA with them, and that you want to fund it by transferring money held in the IRA (of the same type) with New York Life. Give Fidelity the account number of your existing New York Life IRA, tell them how much you want to transfer over -- $1000 or $20,000 or the entire balance as the case may be -- and tell Fidelity to go get the money. In a few days' time, the money will appear in your new Fidelity IRA and the New York Life IRA will have a smaller balance, possibly a zero balance, or might even be closed if you told Fidelity to collect the entire balance. Alternatively, you will receive a check payable to Fidelity FBO naiva's IRA with instructions to send the check on to the correct address at Fidelity. You cannot cash this check or deposit it into your personal account because it is not payable to you; it is payable to your IRA at Fidelity, and you should send it on to Fidelity right away. This makes it a trustee-to-trustee transfer (via your mailbox) and does not raise any issues about you having taken a premature distribution from your IRA etc. which would have arisen if you had cashed the check.

DO NOT approach New York Life and tell them that you want to transfer money to a new IRA with Fidelity: they will bitch and moan and drag their heels about doing so because they are unhappy to lose your business, and will probably screw up the transfer. Talk to Fidelity only. They are eager to get their hands on your IRA money and will gladly take care of the whole thing for you at no charge to you.

Now, one reason why all this might not work easily is if the New York Life IRA is invested in an annuity contract or guaranteed income contract (as many IRAs from insurance companies are) and there are lots of surrender charges that you agreed to pay (you did read the fine print, didn't you?) if you ever decided to transfer the money elsewhere. Annuity surrender charges can include recomputing the growth at a lower rate than specified in the annuity document, as well as other fees.

Answer 2

You should to talk to both. The receiving company will be happy to get your money. The sending company will wish you weren't leaving. The methods they use might clash.

While a seamless electronic transfer would be ideal, what you want to avoid is them sending you a check made out to you. If they have to do it by check the receiving company will tell you who the check should be be made out to. The last time I did this the sending company made out the check using the words specified by the receiving company. The check was mailed to me. I took the check, without endorsing it, completed a form and mailed the check and the form to the specified address. It was straight forward and easy.

Even if they can do the direct transfer, you will need to know information from both companies before doing the transfer. Thus expect to visit both websites before staring the process.