Regular IRA to Self-direct IRA

[AccTaxMan]

IRS instruction says tax free rollover is from one IRA account to another same type of IRA account.

Does a rollover from a regular IRA account to a self-directed IRA account meet the requirement?

[Koss]

Type of IRA

The answer is generally yes.

In the context you are referring to, the "type" of account refers to the distinctions between a Traditional IRA, a Roth IRA, a 401(k), a 403(b), a SEP-IRA, etc.

Any IRA can be a "self-directed" IRA, and that doesn't make it a different "type" of account. "Self-directed" simply means that the account holder has direct, personal control over how the funds are invested, as opposed to an account that is professionally managed by an investment advisor or a fiduciary.

BMK

[AccTaxMan]

The answer is generally yes.

In the context you are referring to, the "type" of account refers to the distinctions between a Traditional IRA, a Roth IRA, a 401(k), a 403(b), a SEP-IRA, etc.

Any IRA can be a "self-directed" IRA, and that doesn't make it a different "type" of account. "Self-directed" simply means that the account holder has direct, personal control over how the funds are invested, as opposed to an account that is professionally managed by an investment advisor or a fiduciary.

BMK

Thank you.

So does that mean if someone lost his job so he has to move his 401-K away from his former employer, there is no way to do a tax free rollover because a rollover from 401-k to IRA are not of the "same type"?

[Koss]

Rollover

No.

It is possible to do a tax-free rollover from a 401(k) to a traditional IRA.

I'm not sure exactly what the reference to the "same type of account" means. Maybe it is a generic term for qualified retirement accounts.

I believe there is an option to do a "rollover" from a 401(k) directly into a Roth IRA. That's a taxable event. What you're doing is moving the funds from a 401(k) to a traditional IRA, and then converting it from a traditional IRA to a Roth IRA, all in one single transaction. The conversion makes it taxable...

There's also Roth 401(k) accounts, and money from those accounts can be rolled into a Roth IRA. That would be a tax-free rollover.

I think maybe the "type" of account refers broadly to the distinction between qualified and non-qualified retirement plans, i.e., pre-tax versus after-tax.

BMK