Merge SEP IRA and Rollover IRA
A client has a small rollover IRA and his new employer has a SEP. If we create a SEP IRA for him to accept his employer’s contributions, can we consolidate his Rollover into the SEP? We are also rolling over the client’s prior employer’s 401(k) funds. Can we roll directly to the SEP or should we roll into his IRA? If he wants to make an IRA contribution, can he make it to the SEP? Thank you!
Permalink Submitted by Alan Spross on Thu, 2011-06-02 19:06
The SEP IRA can accept all these rollovers, and it is also possible to make a regular TIRA contribution to the SEP IRA in addition to the SEP IRA contribution.
If the 401k is sizeable and there is any need for unlimited dollar bankrutpcy protection OR if client will ever want to roll the funds back to a current employer qualified plan (future 401k, 403b, etc), the 401k should be rolled over into it’s own TIRA. Those are the only potential benefits from keeping it separate.
Here is the latest rollover chart:
http://www.mhco.com/Library/Articles/2008/ARoll_Chart_011008.html