Yes, you can transfer an account that’s been part of a Tax-Coordinated Portfolio (TCP). However, doing so may trigger rebalancing within the TCP to maintain your set stock/bond allocation. If you have a taxable account in the portfolio, this rebalancing could lead to a taxable event.
What Happens When You Transfer Out a Tax-Coordinated IRA:
● If your Tax-Coordinated goal includes both an IRA and a taxable account, transferring out the IRA could cause rebalancing in the taxable account. This could result in the sale of securities and realized gains or losses in the taxable account.
Options When Transferring Out an IRA from a Tax-Coordinated Portfolio:
1. Transfer the Taxable Account First
You can delay the IRA transfer and request to transfer your taxable account first. This way, any rebalancing happens in the tax-advantaged IRA.
2. Disable Tax Coordination
You can choose to disable Tax Coordination before transferring the IRA.
- Navigate to Retirement > Overview > Goal Settings > Modify Tax Coordination > I no longer want Tax Coordination and send a request to Customer Support.
- Betterment will reach out for your authorization since disabling Tax Coordination may trigger taxable rebalancing in your taxable account.
3. Cancel the IRA Transfer
If you decide to keep your Tax-Coordinated accounts at Betterment, you can cancel the IRA transfer request and continue benefiting from Tax Coordination.
4. Proceed with the Transfer
You can move forward with the IRA transfer, accepting any potential taxable rebalancing in your taxable account.
Important Considerations:
Betterment is not responsible for any tax consequences, missed market opportunities, or other costs that may occur when transferring an account from a Tax-Coordinated goal. If you have questions about the process, feel free to contact us for further assistance.
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