Yes, you can move your IRA to a money market account without losing its tax-advantaged status, as long as the money stays inside an IRA wrapper at the receiving institution. The cleanest way to do it is a direct trustee-to-trustee transfer, which sidesteps taxes, penalties, and the one-rollover-per-year limit. The type of IRA you hold, whether you pick a bank money market account or a brokerage money market fund, and whether you’re old enough for required minimum distributions all change how the move should be handled.
Which IRAs Can Hold Money Market Investments
Traditional, Roth, SEP, and SIMPLE IRAs can all hold money market accounts at banks or money market mutual funds at brokerages. Shifting into a money market vehicle doesn’t change the tax character of the IRA itself. A Traditional IRA stays tax-deferred; a Roth stays tax-free.
SIMPLE IRAs carry one restriction worth flagging up front. During the first two years after you start participating in the plan, you can only transfer SIMPLE IRA funds to another SIMPLE IRA. Move the money to a Traditional IRA, a brokerage money market fund, or any other non-SIMPLE account during that window and the IRS treats it as a taxable distribution with a 25 percent penalty on top of income tax, rather than the usual 10 percent early withdrawal penalty.1Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules After the two years are up, you can transfer freely.
Bank Money Market Account or Brokerage Money Market Fund
“Money market” covers two different products, and the protections aren’t the same.
Money Market Account at a Bank or Credit Union
A money market account is a deposit product. It behaves like a savings account with a slightly higher rate and sometimes limited check-writing. Held inside an IRA at an FDIC-insured bank, deposits are insured up to $250,000 under the “Certain Retirement Accounts” ownership category.2FDIC.gov. Certain Retirement Accounts That category is separate from your personal checking and savings at the same bank, so your IRA gets its own $250,000 of coverage.3FDIC.gov. Understanding Deposit Insurance As of early 2026, the national average yield on money market accounts is roughly 0.43 percent APY, though online banks often pay significantly more.
Money Market Mutual Fund at a Brokerage
A money market fund is a mutual fund that invests in short-term debt like Treasury bills and commercial paper, aiming to keep a stable $1 share price. It’s not FDIC-insured. If the brokerage fails, SIPC covers up to $500,000 in customer assets with a $250,000 sublimit for cash. Money market fund shares count as securities rather than cash, so they get the full $500,000 protection.4SIPC. How SIPC Protects You SIPC covers brokerage failure. It doesn’t protect you against a decline in the fund’s value.5Securities Investor Protection Corporation. What SIPC Protects
Money market funds also charge an annual expense ratio deducted from returns. To compare a fund against a bank’s advertised APY on equal terms, look at the fund’s seven-day SEC yield, which annualizes the return after fees.
Direct Transfer or Indirect Rollover
There are two mechanics for moving IRA money, and the choice matters.
Direct Trustee-to-Trustee Transfer
Your current custodian sends the money straight to the new institution. You never touch it. This isn’t treated as a distribution and generally doesn’t need to be reported on Form 1099-R.6Internal Revenue Service. Instructions for Forms 1099-R and 5498 The one-rollover-per-year limit doesn’t apply, and there are no withholding requirements.7Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions You can do as many as you want in a year. For nearly everyone moving an IRA to a money market vehicle, this is the right method.
Indirect (60-Day) Rollover
Your custodian sends a check to you, and you have 60 days to redeposit the full amount into the new IRA.8Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts Miss the deadline and the whole amount is a taxable distribution. If you’re under 59½, add a 10 percent early withdrawal penalty.9Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions From Traditional and Roth IRAs
Federal law also caps you at one indirect rollover across all your IRAs in any 12-month period. If you completed one from any IRA within the past year, a second one gets taxed as a distribution.8Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts Direct trustee-to-trustee transfers don’t count against this limit.
What You’ll Need and How Long It Takes
Before starting a transfer, pull the following from your current custodian: the account number from your latest statement, the custodian’s legal name and mailing address, its Employer Identification Number, and a list of current holdings, since non-cash investments generally need to be liquidated before they can move into a money market vehicle.
The receiving institution provides a transfer request form asking whether you’re moving the full balance or a partial amount, plus the destination account number. Many firms accept the request online; some still require ink signatures. For larger transfers or changes in account registration, the outgoing custodian may require a medallion signature guarantee, a special stamp from a bank or brokerage that certifies your identity. Not every branch offers medallion stamps, so call ahead if one is needed.
Direct transfers typically take seven to fourteen business days. Electronic transfers routed through the Automated Customer Account Transfer Service (ACATS) can settle faster than paper.10DTCC. Automated Customer Account Transfer Service (ACATS) If the current IRA holds stocks, bonds, or mutual fund shares, the custodian generally liquidates and sends cash. That adds a day or two and can generate small gains or losses inside the IRA, but those aren’t taxable events inside the wrapper.
Watch for outgoing transfer or account-closing fees. Many brokerages charge between $50 and $150 per IRA transfer. Some waive it for partial transfers or for customers with other accounts. The receiving firm sometimes reimburses the fee to win your business. Ask before you file the paperwork.
Keep the confirmation letters, transfer forms, and before-and-after account statements. For an indirect rollover, note the exact dates you received the distribution and made the deposit. That paperwork is your evidence if the IRS asks.
If You’re Already Taking Required Minimum Distributions
If you’re 73 or older, you owe a required minimum distribution each year from a Traditional, SEP, or SIMPLE IRA. Under the SECURE 2.0 Act, the starting age is 73 through 2032 for people born between 1951 and 1959, and rises to 75 for those born in 1960 or later.11Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) Moving the IRA into a money market vehicle doesn’t excuse the RMD.
A trustee-to-trustee transfer doesn’t count as a distribution, so it doesn’t satisfy the RMD. In an RMD year, take the RMD first, or ask the current custodian to distribute it before the transfer. Otherwise the new institution has no record of the RMD being met, and the shortfall carries a 25 percent excise tax.
Roth IRAs are different. The original owner never has to take lifetime RMDs, so a Roth transfer to a money market account raises no timing issue.11Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
If the IRA Was Inherited
Different rules apply to an IRA inherited from someone who wasn’t your spouse. You cannot roll an inherited IRA into your own IRA or treat it as your own. You can move it through a trustee-to-trustee transfer to a new custodian, but the account has to stay titled in the deceased owner’s name for your benefit.12Internal Revenue Service. Publication 590-B, Distributions From Individual Retirement Arrangements (IRAs)
Non-spouse beneficiaries also can’t use the 60-day indirect rollover method. If the custodian sends a check payable to you, the full amount becomes a taxable distribution, and you can’t deposit it into an inherited IRA. Direct trustee-to-trustee transfer is the only viable route.
Moving to a money market account doesn’t reset your distribution deadlines either. Under the 10-year rule for most non-spouse beneficiaries, the entire inherited balance has to be withdrawn by December 31 of the year containing the 10th anniversary of the original owner’s death.12Internal Revenue Service. Publication 590-B, Distributions From Individual Retirement Arrangements (IRAs) A money market account can be a practical place to hold the funds while you draw them down over that period.
If You Miss the 60-Day Deadline
If you chose an indirect rollover and blew past 60 days, the IRS may still waive the deadline. You can self-certify to the receiving IRA custodian in writing, provided your reason for missing the deadline falls into one of 11 categories listed in Revenue Procedure 2016-47. Qualifying reasons include a financial institution’s error, serious illness of the account holder or a family member, a misplaced check, severe damage to your home, and postal errors.13Internal Revenue Service. Retirement Plans FAQs Relating to Waivers of the 60-Day Rollover Requirement Self-certification lets the receiving custodian accept the late deposit, but the IRS can still review and deny the waiver during an audit.