Can I withdraw IRA and transfer to another account

1. How to move an IRA without triggering tax: trustee‑to‑trustee transfers and direct rollovers

The IRS explicitly permits having the current custodian send funds directly to another IRA or retirement plan — called a trustee‑to‑trustee transfer or direct rollover — and that method avoids immediate tax withholding or triggering a taxable distribution ^[1]. A plan administrator can also issue a direct rollover check payable to the new account, and these direct transfers are treated as non‑taxable movements of retirement assets when done correctly ^[1].

2. The risky alternative: indirect rollovers and the 60‑day clock

If the account owner receives the distribution first (an indirect rollover), the IRS imposes a 60‑day deadline to redeposit the funds into another IRA or qualified plan; missing that window can force inclusion of the amount in gross income and may subject the distribution to the 10% early‑withdrawal penalty if under age 59½ ^{[1] [2]}. The IRS also limits frequency of some IRA‑to‑IRA rollovers — amounts included in gross income if an IRA‑to‑IRA rollover was done in the preceding 12 months — so the indirect route creates additional traps ^[1].

3. Taxes, penalties, and exceptions — Roth vs. Traditional

Withdrawals from traditional IRAs are taxable as ordinary income and if taken before age 59½ generally face a 10% early‑distribution penalty unless a statutory exception applies; Roth IRA rules differ: contributions (but not necessarily earnings) can often be withdrawn tax‑ and penalty‑free and qualified Roth withdrawals are tax‑free after age 59½ once the five‑year holding rule is satisfied ^{[3] [4]}. The IRS and custodians list many exceptions to the 10% penalty — first‑time home purchase, certain medical expenses, disability, and others — but those exceptions may still leave ordinary income tax on traditional IRA withdrawals ^{[4] [3]}.

4. SIMPLE IRA transfers and the special two‑year restriction

SIMPLE IRAs carry an important wrinkle: within the first two years of participation, funds generally may only be rolled into another SIMPLE IRA without penalty, and distributions within that period that are early can incur a substantially higher 25% penalty rather than the usual 10% ^{[5] [6]}. After the two‑year period, transfers to other IRAs or employer plans are treated more like standard rollovers, but the two‑year timing and higher penalty are a distinct risk to watch ^{[5] [7]}.

5. Required minimum distributions and timing considerations

Once required minimum distribution (RMD) age rules apply — generally beginning at age 73 under current guidance — owners must take mandated withdrawals from traditional IRAs and some other plans, and RMDs can be aggregated across IRAs but must be calculated separately for each account; Roth IRAs do not require RMDs while the owner is alive ^{[8] [9]}. Missing RMDs risks steep excise taxes on shortfalls, so moving funds between accounts in a year when an RMD is due demands attention to timing and calculation ^[9].

6. Practical steps and red flags to avoid unnecessary tax or penalties

The practical playbook is to request a trustee‑to‑trustee transfer or direct rollover from the current custodian to the receiving institution and confirm handling in writing, avoid taking distributions to oneself unless prepared to redeposit within 60 days and to account for withholding, check SIMPLE IRA two‑year status before moving those funds, and consult the custodian or a tax advisor for timing around RMD years to prevent penalties ^{[1] [5] [9]}. Sources from the IRS and major custodians emphasize that correct transfer mechanics — not simply intention — determine whether a move is tax‑free, and small mistakes on timing or method can convert a rollover into a taxable distribution ^{[1] [2]}.