How do I rollover my IRA into Betterment?

Last Updated: August 27, 2014 5:43PM EDT
For IRA rollovers we prefer to utilize the indirect rollover process offered by the IRS, as we find that it’s the simplest and most efficient method and also involves the least amount of paperwork. This method avoids any negative tax consequences and 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", and this is the same thing. Again - there are no negative tax consequences for this.
  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 amount of your rollover 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 do a direct rollover.
  • 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 - 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 instead, to avoid negative tax consequences. Please contact us to get started. You can read more about rolling over inherited IRAs into Betterment here
To read more about this process and to find specific answers to your tax questions, refer to the IRS Publication 590.

Note: If you prefer to do a direct trustee-to-trustee rollover of your IRA, we can definitely assist you with that as well. Simply send us an email request via rollovers@betterment.com and we'll be happy to send you the info needed to get that process started. 

Related Questions:
How do I convert my Betterment Traditional IRA into a Roth IRA?
How can I rollover my 401(k), 403(b), or a similar plan into Betterment? 
Can I rollover an Inherited IRA/401(k) or other retirement plan into Betterment? 
How will the 2015 IRS changes to the "Indirect Rollover" process impact me?

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