Hello,

A client maintains both personal IRAs (Roth and Roth Conversions) and a business IRA (Simple IRA – all Traditional $). Commencing next year, his business is adopting a 401(k)/Profit Sharing Plan in order to (a) make greater combined contributions relative to the Simple IRA as well as (b) designate up to $18k in elective employee deferrals as Roth/after-tax $, if desired. The Simple IRA is being terminated at the conclusion of this year.

In terms of the Simple IRA, is there any benefit to transferring this via direct rollover (trustee-to-trustee) into the 401(k)/Profit Sharing Plan or into a Traditional IRA? Assume the investments available are identical as they’re maintained at the same custodian – so that isn’t an issue (neither are fees for that matter). Since it’s a Simple IRA, whether it’s (a) maintained as-is, (b) rolled into the 401(k)/Profit Sharing Plan or (c) rolled into a Traditional IRA, I want to confirm it would be fully protected from creditors regardless of the amount (no creditor issue; however, just viewing differences from a planning perspective).

The client is relatively young (in his late 30s). If transferred into the new 401(k)/Profit Sharing Plan, when he turns 59 1/2 if he wanted he could do an in-service distribution of the pre-tax monies and, if he wanted to perform a Roth conversion, the Simple IRA (or if it were transferred into a Rollover IRA) would not be considered since the funds would be in the 401(k)/Profit Sharing Plan – although this is a long time out.

Please advise regarding the potential pros/cons principally from an asset protection perspective regarding whether to keep the Simple IRA as-is, versus rolling it over, trustee-to-trustee, either into the 401(k)/Profit Sharing Plan or else a Rollover IRA. The client would not wish to perform a Roth conversion of any of the Simple IRA $ at the present time. Thank you.

Jason