If you want to be the middleman in the transfer the existing custodian will withhold 20% for taxes before sending the funds directly to you. To deposit the full amount of the transfer you would have to forward the funds that they send you PLUS you would have to include the 20% they withheld for taxes from other personal funds you have. If you do not add back in the 20% withheld for taxes that becomes taxable income and potentially subject to the 10% tax on early distribution (depending on your age). For example, if you directly receive the transfer for a $5M account the existing custodian will withhold $1M for taxes and send you $4M. To transfer the full amount you would have to add $1M from your personal funds to get back up to the full $5M transfer. You would get the $1M withheld for taxes back when you file your tax return the following year.
A brokerage account generally allows flexibility to include funds from many different mutual fund companies in one account. However there can be circumstances for individuals having a connection to the financial services industries that require employer monitoring of brokerage account transactions that does not apply to mutual fund company accounts.
As referenced by another post a direct transfer of the account by the successor custodian is the easiest way to move it.
A brokerage account generally allows flexibility to include funds from many different mutual fund companies in one account. However there can be circumstances for individuals having a connection to the financial services industries that require employer monitoring of brokerage account transactions that does not apply to mutual fund company accounts.
As referenced by another post a direct transfer of the account by the successor custodian is the easiest way to move it.
Statistics: Posted by 123 — Fri Apr 12, 2024 3:13 pm — Replies 4 — Views 122