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How do I use the indirect rollover process to move my IRA into Betterment?

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The indirect rollover process involves withdrawing from your current IRA and re-depositing the funds into another IRA within 60 days. IRS rules limit the use of an indirect rollover process to once per individual per 12-month period. If you have used this method in the past 12 months, please contact our Support team for direct transfer instructions.

To complete an indirect rollover, there are just two easy steps:

  1. Ask your provider for an early distribution with no withholding. Your provider may call it a "premature distribution,” which is the same thing. Again, there are no negative tax consequences for this, so long as you complete the indirect rollover according to IRS rules.
  2. Deposit that money into your Betterment IRA within 60 days to avoid tax penalties. Log in and go to the Transfer tab. Enter the full amount of your rollover, including any taxes that may have been withheld, and select "IRA Rollover" as 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 (except after your spouse’s death) - 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 to avoid negative tax consequences. To read more about this process and to find specific answers to your tax questions, refer to the IRS Publication 590. To initiate this rollover type into Betterment, please contact rollovers@betterment.com.