How to Use a Partial Rollover to Invest in Alternative Assets

Want to invest some of your retirement funds in alternative assets using an Alto IRA or CryptoIRA^® without rolling over your entire account? If so, this guide is for you.

Here, we’ll explore what a partial rollover is, the benefits of doing a partial rollover, and three ways to complete a partial rollover into Alto from another custodian.

What Is a Partial IRA Rollover?

We’ve found partial rollovers are one of the most common types of rollovers, especially for those who are trying out alternative investing for the first time. 

A partial rollover is a type of transfer in which only a portion of the funds from an individual retirement account (IRA) or employer-sponsored retirement plan, such as a 401(k), is moved to another eligible retirement account. This is in contrast to a full rollover, in which all of the funds are transferred.

It’s important to note that you must transfer funds into Alto from a compatible retirement account. For example, traditional IRA to traditional IRA, Roth IRA to Roth IRA, 401(k) to traditional IRA, Roth 401(k) to Roth IRA, etc.

Custodians can process rollovers through two means: ACATS and Non-ACATS. ACATS is an automated system through which custodians can transfer assets from one firm to another. Non-ACATS custodians are not part of that system, so additional paperwork is needed to go through the process of transferring assets. At this time, Alto is a non-ACATS custodian, which is why there are some additional steps.

At Alto, the process for partial rollovers is the same as the process for a full rollover. The main difference is that not all transferring custodians will allow a partial rollover. Though uncommon, in that case, the best option is to roll over all funds to a custodian that does allow partial rollovers. Once that happens, you can initiate a partial transfer into Alto in one of two ways:

• Direct transfer: This is a trustee-to-trustee transfer and is often the most simple. 
• 60-day rollover: With this type of transfer, you notify your current custodian that you are going to be rolling over funds into another account and want to initiate a 60-day rollover.

More On 60-Day Rollovers

In the case of a 60-day rollover, your current custodian will send the funds directly to you via check or to your personal bank account via ACH or wire transfer. Then you’ll have 60 days to send the funds to Alto. If you receive a check from your current custodian, you’ll need to deposit it into your personal bank account and then send Alto a new check or you can wire the funds directly to Alto.

Keep in mind that it’s your job to send the funds to Alto within 60 days or you’ll face significant taxes. You may also be subject to penalties if you are under 59 and a half years old. Also, keep in mind that you can only do one 60-day rollover per year and your custodian may withhold 20% of your transfer for taxes. You will be responsible for depositing the gross amount of the transfer into your IRA to complete the rollover, but you should receive a tax refund when you file your taxes for the year. 

Read more: What Is The Difference Between A 60-Day Rollover And A Direct Rollover?

Why Do a Partial Rollover?

There are several benefits of doing a partial rollover, especially into a custodian like Alto that offers access to alternative investments. 

1. A Wider Range of Investment Options

One of the main benefits of a partial rollover into an IRA provided by a platform that offers access to alternative assets is access to a wider range of investment options. Alternative assets include startups, real estate, private credit, crypto, and more. Since most employer-sponsored accounts are only invested in a mix of stocks and bonds, initiating a partial transfer into Alto means access to investments seldom available in conventional retirement accounts.

2. Potential for Higher Returns

Due to a variety of reasons, including a 50% decline in the number of U.S. publicly traded companies, outsized returns are rarely seen in the public markets today. Alternative assets can offer the potential for higher risk-adjusted returns, which can help you grow your retirement savings more quickly. The returns on alternative assets can vary widely, depending on the type of investment, so it’s essential to do your own research.

3. Diversification

By investing a portion of your retirement funds in alternative assets, you can diversify your portfolio and potentially reduce the overall risk of your retirement investments. Diversification is an important aspect of a well-rounded investment strategy, as it helps to reduce the impact of market fluctuations on your portfolio.

3 Ways to Initiate a Partial Rollover Into Alto

Assuming you have already opened an Alto account and are ready to fund it with a partial rollover, you have three options.

1. Direct Partial Rollover: IRA Transfers and Manual 401(k) Rollovers

Before completing a direct partial rollover, it’s important to verify with the transferring custodian where your funds are currently held that they allow partial rollovers. Once confirmed, follow the instructions below to complete a direct partial rollover into Alto. These steps only apply to IRA transfers and manual 401(k) rollovers. 

1. Log in to your Alto account and select Transfer Funds from the menu bar, then Into Alto from the dropdown menu at the top of your dashboard.
2. Select the type of retirement account you are transferring from (IRA transfer or 401(k) Rollover). 
3. Select the name of your custodian from the Transferring Custodian dropdown menu.
4. Enter the account number of your transferring account in the box underneath Account Number.
5. Select the amount you’d like to transfer from the Transfer Amount dropdown menu. For a partial rollover, choose the specific amount of cash you’d like to transfer.
6. Select the delivery method for your rollover (check or wire) from the Delivery Method dropdown menu.
7. Click Continue.
8. Review and sign.
9. Complete the paperwork.
10. Click to print your Transfer of Assets Request form.
11. Once it’s printed out, use black ink to apply a wet signature in the Wet Signature Required box on the form.
12. Scan your form and make sure it’s a PDF file.
13. Go back to the Wet Signature Required page and upload your scanned PDF file.
14. Click Submit and you’re done!

2. Capitalize: The Simplest Way to Complete a 401(k) Partial Rollover

If you’re doing a direct 401(k) partial rollover and you’d prefer to forgo the manual process above, you can take advantage of Alto’s partnership with Capitalize. If your current 401(k) custodian allows partial rollovers, Capitalize will work directly with the administrator on your behalf, acquire the funds, and send a check to Alto. 

Here’s how to initiate a 401(k) partial rollover with Capitalize:

1. Log in to your Alto account and select Transfer Funds from the menu bar, then Into Alto from the dropdown menu at the top of your dashboard.
2. Select 401(k) Rollover. 
3. At the top of the page, click Go to Capitalize, and you’ll be redirected to the Capitalize platform.
4. Fill out the form, and Capitalize will take care of the rest. If you’re completing a partial rollover, under How much of your account balance do you want to roll over?, click Other, and then write in the amount you’d like to roll over. 

3. 60-Day Partial Rollover

To complete a 60-day partial rollover (which would be best to avoid if you are able to complete a direct rollover), here are the steps:

• Contact your current custodian and request a 60-day rollover. 
• Once you receive the funds from your current custodian, send a check to the below address or contact us for wire details:

Alto Solutions, Inc.
500 11th Ave N. Suite 790
Nashville, TN 37203

Since 60-day rollovers are usually delivered by custodians as a check, please allow approximately 10 days for the check to arrive at your mailing address, and then include the additional time it will take to mail or wire funds to Alto.

Unlock Alternative Investments with a Partial Rollover

Want to use a portion of your retirement funds to invest in alternative assets? Open an Alto IRA or CryptoIRA today to initiate a partial rollover.