IRA to SIMPLE Transfer Allowed?

Submitted by Nathan Kastner on Fri, 2018-02-02 13:52

This seemingly simple question (pun intended) is driving me mad. To wit: does the law allow for a trustee-to-trustee transfer of funds from a traditional IRA to a SIMPLE IRA? I’m not asking about rollovers, but rather a T-2-T transfer, specifically. If anyone has a cite, that would be even more wonderful.

Thanks in advance,



Submitted by Alan - IRA critic on Fri, 2018-02-02 19:08

  • Yes, the funds can be moved into a SIMPLE IRA after the 2 year waiting period by either direct transfer or 60 day rollover from another non Roth IRA, or by direct rollover from a qualified plan. I cannot think of any allowed portability option where a 60 day rollover is permitted, but a transfer or direct rollover is not. I see why you have had a problem finding IRS clarity on this question because the IRS has not really integrated the rollover to SIMPLE IRAs into their publications including 590A, 560, and 575. The IRS rollover chart has been updated and none of the allowed portability options on the chart including to SIMPLE IRA accounts distinguish between a rollover and a transfer. 

Submitted by Nathan Kastner on Wed, 2018-02-07 17:04

Thanks for the reply. My heartburn, I’m afraid, is more one of internal processes and logistics of the company I’m dealing with. I am a financial advisor, by trade. One of our clients has both an (old) IRA and a SIMPLE IRA. He still contributes to the SIMPLE. He wants to consolidate them for simplicity’s sake. Both are held at the same custodian, and invested in low-cost ETFs. Like I said, this is merely a matter of not having to pay two annual account fees. The custodian (the largest in the world, fwiw) is insisting that the only way to get the IRA into the SIMPLE is to take a premature distribution (client is only 52) and then redeposit the funds into the SIMPLE. This will, of course, burn the client’s once-per-year rollover, which I am loath to do in February. 

Submitted by Alan - IRA critic on Wed, 2018-02-07 17:51

  • See Article I of the attached revised SIMPLE IRA 5305 SA
  • https://www.irs.gov/pub/irs-pdf/f5305sa.pdf
  • If the custodian had not adopted these changes, they would not be willing to accept a 60 day rollover, which would be very inconvenient when the funding account was a qualified plan due to the 20% mandatory withholding. While the CSR seemed to be aware of rollover acceptance, perhaps they are just confused about direct transfer OR their systems have not been updated. Even with the added portability, I think that very few incoming rollovers/transfers are encountered compared to outgoing.

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