Staying home no reason to move IRA Ask Dr. Don by Don Taylor, Ph.D., CFA, CFP • Bankrate.com

Hello Dr. Don,
My husband and I have a self-directed IRA through a brokerage house with some stocks and a Zweig fund. We have about $5,000 in it, but haven't touched it in over a year. I'm wondering if I should roll it over into a spousal IRA now that I'm home with our first child or should we keep it self-directed and add a couple more funds? Any suggestions?

Thanks,
-- Christina Contribution

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Dear Christina,
Becoming a stay-at-home mom isn't a reason to move the account. Contributions to an IRA are specific to a tax year and a taxpayer. Every year you have the option to add to an existing account, fund a new account or split your contributions between existing and new accounts -- as long as total contributions don't exceed your contribution limit. IRA accounts are in the name of a taxpayer and, short of an inheritance, can't be rolled from one taxpayer to another.

If the self-directed IRA account is in your name, you can move the money to another IRA account. It's best to do this as a trustee-to-trustee (direct) transfer but, unlike an IRA rollover from an employer-sponsored plan, there's no mandatory withholding when you move money from one IRA account to another. You have 60 days to complete the transfer. You are also limited in the number of rollovers you can make in one year.

If you're unhappy with how the money is invested, then you should review the investments, consider your options within the existing account and decide whether you need to move the money in order to get to a point where you are happy with the investments and the account.

Periodically reviewing how the account is invested and deciding whether to rebalance the investments in the account is a good habit to get into, but on its face, having the $5,000 in one place for a year without touching the investments is a good thing. Periodic review means different things to different people, but an annual review is a good idea.

The spousal account deduction rules may be just the ticket for you to contribute to an IRA account this tax year. Review IRS Publication 590, Individual Retirement Arrangements, for contribution limits and eligibility requirements.

Thanks to David A. Littell, the Joseph E. Boettner Research Chair and professor of taxation at The American College for helping me in the reply to this reader's question.

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