In-kind transfers in the Self-Directed world are like moving private stock a real estate property from one IRA to another. Rocket Dollar is phasing out all incoming in-kind transfers. Cash rollovers and transfers do not receive an extra charge.
What is an in-kind transfer?
An in-kind transfer is when instead of selling out your assets to a specified amount of retirement cash, you keep the asset in your IRA and transfer it "in-kind" to another retirement account IRA or 401(k). Rocket Dollar is not supporting this type of transfer at this time.
Do I get charged for moving retirement cash?
No. Rocket Dollar does not charge to move retirement tax-advantaged cash from one IRA to another IRA or a 401(k). Keep in mind your 401(k) custodian you are sending money from may charge to issue a check for a normal transfer.
Why does Rocket Dollar not allow in-kind transfers?
As of January 15th 2021, Rocket Dollar has phased out In-kind transfers.
- In-kind transfers are among the most complex type of retirement account transactions. Unlike stocks and bonds, which have decades of in-kind transfer and retitling of assets infrastructure, there is no in-kind transfer infrastructure for alternative assets. This lack of infrastructure is replaced by manual work to retitle the asset.
- Because of the IRA LLC structure, we cannot accept stocks and bonds directly. Someday this might change, but for now, dollars have to come over as cash, then someone can open a brokerage account under their IRA LLC or Solo 401(k) trust.
- It is our mission to keep self-directed investing as affordable as possible. The price of an IRA LLC for $360 and $15 a month and our Gold pricing for $600 and then $30 a month is sometimes a 1/3 to 1/2 the cost of competitors. We have long thought competition has been charging way too much for access to a self-directed IRA. Because of this, we have to keep to simple repeatable processes and ensure our customers are well supported on the products they purchased. In-kind transfer processes for alternative investments are intensely manual.
- The complexity of in-kind transfers is so high that many customers who desired to do an in-kind transfer often give up trying early on or halfway through the process. Many do not realize that transferring something like a real estate property from one IRA to another can take 10-13 steps with many different parties to do it successfully. Errors in this process can leave your asset with incomplete legal titling or put the tax-advantaged status of your investment at risk
Is there any way I can avoid an in-kind transfer?
Rocket Dollar will never charge to transfer over retirement cash from another IRA Transfer or 401(k) Rollover. If it is possible to sell out of that asset and rebuy it in a new retirement account when your Rocket Dollar account is open, you can do so.
Be careful of prohibited transaction rules while doing this, as each selling and buying of the asset is a transaction event where you must be aware of prohibited transaction rules.
If you don't allow in-kind transfers, what should I do if I have other alternative assets in other self-directed IRAs?
After hearing about all the steps, fees, and complexities to do an in-kind transfer, most of our customers decided to "drain" their old self-directed IRAs as they slowly sell off illiquid assets. They then use Rocket Dollar Checkbook IRA LLC for their other transactions and low fees. This is not ideal obviously, many customers would like to put all their assets under their own new IRA LLC, but we had to charge fees of at least $400 assets in order to be worth our time.
When presented with all the options, and the complexity of moving some of their assets, many customers determined to just open a checkbook IRA and drain their old self-directed IRAs by rolling over what cash they could now, and more later as they sold off assets.
What does the in-kind transfer process look like at other custodians?
To complete an in-kind transfer, it usually can take intense coordination between quite a few parties. You, your old IRA custodian, whoever has issued the investment asset, and whoever controls the titling of the investment. If one or more parties of the transaction are hesitant or slow to cooperate, the winning custodian has to spend a significant amount of time tracking down deliverables and through slower processes than moving retirement cash or traditional stocks, bonds, and mutual funds which have significantly more established infrastructures to support the in-kind transfer of traditional assets. In order to safely move your assets, these processes must be followed to respect retirement account IRS regulation and avoid a prohibited transaction.
Other custodians sometimes charge up to $1000 per asset transfer.
It's also much easier to move ONE IRA LLC (which may contain many investments underneath it) in-kind than a direct custody IRA in many different assets.
Will Rocket Dollar help me transfer my IRA LLC if I decide to go to another custodian?
Of course. Just understand that this is an involved process that could take significant steps, with you tuning in and coordinating between both custodians, and titling of the specific assets from investment issuers or real estate property deeds.
The LLC must move from one unit to another custodian. So, if an LLC has five properties in it, another custodian could intake the entire IRA LLC and thus all assets owned by the LLC. Rocket Dollar's Custodian cannot separate the assets from the LLC.