Simple IRA r/o to traditional IRA
Client has a Simple IRA, initial contribution made over 2 years ago. Client recently added a 2008 contribution. When is it permissable to roll the 2008 and/or prior year contributions in the Simple to a traditional IRA? Can it be a partial rollover and thus keep the Simple active for 2009 contributions?
TG
Permalink Submitted by Alan Spross on Tue, 2009-01-06 00:10
Yes, once the 2 year period is satisfied, partial rollovers to a TIRA can be done at anytime. These are best accomplished by direct transfer. The amount left in the SIMPLE may be affected by whatever fees would be incurred by having a very small balance.
Permalink Submitted by Tim Golden on Tue, 2009-01-06 00:49
Great, thank you.
Permalink Submitted by charles lore on Tue, 2009-01-06 01:07
Alan let’s say it is a SEP that has been contributed to and the business is still active.
Can past contributions be rolled to a TIRA while fresh company contributions are made into SEP? How about converted to a ROTH assuming
Permalink Submitted by Alan Spross on Tue, 2009-01-06 02:02
Chuck,
Yes, SEP IRA balances can be rolled to a TIRA other than a SEP IRA, and without the 2 year waiting period for a SIMPLE IRA. And new contributions can continue to be made to the SEP IRA. This is also true at RMD time, as the RMDs must come out but new contributions can be made to a SEP IRA, even after 70.5.
Same for Roth conversions from either a SIMPLE or SEP IRA, as long as owner is income eligible to convert. If the conversion is done and income comes in too high, the Roth must be recharacterized back to the SEP or SIMPLE IRA.
Permalink Submitted by charles lore on Tue, 2009-01-06 03:10
Following up with the RMD end of this… Lets say SEP owner is age 71 , it’s not 2009 , he has 3 TIRA’s elsewhere and is
Permalink Submitted by Alan Spross on Tue, 2009-01-06 04:02
Yes, he can aggregate his RMDs any way he wants between the SEP and TIRA accounts.
Permalink Submitted by mk foss on Tue, 2009-01-06 17:42
There’s not a possibility of holding off the RMD from a SEP after 70 1/2 regradless of ownership. Its just treated as another IRA as Alan said.