Trustee-to-trustee transfer
Definition
From a technical perspective, trustee-to-trustee-transfers means that the assets are paid to the receiving retirement custodian, trustee or other approved recipient.
Within the retirement industry, the term trustee-to-trustee-transfer is usually used to refer to a transfer, where the assets are moved nonreportably between accounts of the same type. See transfer.
For purpose of the transfer rule, transfers occur between accounts or retirement plans of the same type. For instance,
- from a traditional IRA to another traditional IRA ( or SEP IRA) that has the same owner for both.
- from a Roth IRA to another Roth IRA that has the same owner for both.
- from a SIMPLE IRA to another SIMPLE IRA, traditional IRA or SEP IRA that has the same owner for both. If the SIMPLE IRA has not satisfied the two-year requirement, the transaction is reportable
- From a qualified plan to another qualified plan, where the employer is the sponsor for both plans. Transfers can occur between different types of qualified plans, when the assets are being moved between qualified plans sponsored by the same employer.
The IRS uses the term trustee-to-trustee to indicate that the check or other asset is made payable to the receiving financial institution (or other entity) for some reportable transactions. Examples include:
- Treasury regular 1.408A, as it relates to Roth conversions and recharacterizations , where it is provided that a direct conversion is a trustee-to-trustee transfer;
- Treasury regular 1.408A, as it relates to a recharacterization , which must be completed as "trustee-to-trustee transfer "
- The qualified charitable donations provisions, which provides that the distribution must be delivered to the eligible charity as a trustee-to-trustee transfer, and
- Qualified HSA funding distributions. See the article Reporting Requirements for a Qualified HSA Funding Distributions (QHFD) :
Referring Cite
IRS Instructions for filing 1099-R and 5498 , IRS Publication 590 , Revenue Ruling 78-406
Additional Helpful Information
- Non-reportable transfers between can occur for an unlimited number of times during any period. This is unlike rollovers between IRAs, which are limited to one per 12-month period per ‘involved’ IRA
- If the movement of assets from a qualified plan, 403(b) or governmental 457(b) plan is done as a trustee-to-trustee transfer, where the transaction is a direct rollover, there is no withholding on the distribution
- ‘Trustee-to-trustee-transfer’ often refers to the means of delivery and not necessarily the type of transaction
