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Someone told me if I do a transfer of funds or stock from one IRA to another in New Jersey that I must pay income tax on the transaction. This seems nuts, but you never know with politicians and bureaucrats. I suppose she meant

I explained that to my knowledge, if you transfer from a regular IRA to a Roth IRA, tax is due, but I did not think tax would be due from one IRA to another. She insists that it applies from one IRA custodian to another. She has mutual funds (probably money market) that she switches from one custodian to another to get the best interest rate. I do not invest like that, so I have not thought much about it.

Could my friend be right? (It does not matter to me, since I do not plan to make such a transfer anyway.) Or did she screw up and have the funds pass through her hands from one custodian to the next?
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