- 1). Open a traditional IRA account. Before you can move your SEP-IRA assets, you need to have an open account to receive the funds. Most financial services firms, including banks, will be able to open your account for you.
- 2). Decide between a rollover and a trustee-to-trustee transfer. In a rollover, you receive a physical check for your funds, and you are required to redeposit them into another IRA within 60 days of distribution. Failure to do so will result in the taxation of the full amount of the distribution. In a trustee-to-trustee transfer, your two IRA custodians make the transfer electronically on your behalf. In most instances, a trustee-to-trustee transfer is both quicker and more reliable.
- 3). Determine if any assets need to be liquidated. If you are going to rollover your funds, you will need to take a full withdrawal of your assets, so you will have to sell everything in your SEP-IRA account. For a trustee-to-trustee transfer, you can usually transfer your securities as-is, but you may have to liquidate some firm-specific securities, such as proprietary mutual funds. Ask your SEP-IRA custodian about the portability of your assets.
- 4). Process your transfer. If you are rolling over your assets, call your SEP-IRA administrator and liquidate your account. Ask for a check for the full proceeds, and instruct them to take out no federal or state taxes. Once you receive your check, deposit it into your traditional IRA account. Instruct your new IRA custodian that your deposit is a rollover of your SEP-IRA funds. For a trustee-to-trustee transfer, inform your new IRA custodian that you would like to transfer over your SEP-IRA funds and ask for the appropriate transfer paperwork. Usually, the paperwork can be completed with a signature and a copy of your most recent SEP-IRA statement.
- 5). File your taxes properly. If you rolled your assets over into your new IRA, you will receive a Form 1099-R at the end of the year, indicating the amount of the withdrawal from your SEP-IRA. Although this amount is not taxable, you will still have to enter the amount on line 15a of your Form 1040, but you should enter zero as the taxable amount on line 15b.
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