SIMPLE IRA Portability – Handled as a Rollover or Transfer?
Under the new SIMPLE IRA portability provisions that were granted in Dec as part of the PATH Act, do we know how the transactions are to handled; rollover and reported, transfer or even handled as a consoldiation like when moving from an IRA to a SEP.
In other words, when moving money from a Trad IRA to a SIMPLE, should the transaction be handled as a rollover or transfer or even possibly as a consolidation? When moving money from a QRP to a SIMPLE, rollover or transfer? Have not seen any guidance on this? Do we know for sure? Where can I find verification of how these transactions are to be handled? If it’s a rollover to SIMPLE does the rollover count as the 1 rollover per year?
Permalink Submitted by Alan - IRA critic on Wed, 2016-02-10 21:57
The ability of SIMPLE IRAs to receive rollovers are subject to the same rules as other IRA accounts, except that the SIMPLE IRA must be held 2 years before receiving such a rollover. If the funds are coming from another IRA, they can be moved by direct transfers with no limits on the number of transfers, or by indirect 60 day rollover under which only one such rollover can be done for ALL IRA accounts within a 12 month period. Therefore, a direct transfer is the best way to proceed. There is no such thing as a “consolidation”, just a transfer, a direct rollover or a rollover. A direct rollover from a qualified plan to a SIMPLE IRA does not count with respect to the one rollover limit.