The 2-Year Rule for a SIMPLE IRA- direct transfer in?
I had two jobs, both with retirement benefits. I left one job and asked that my pre-tax 401(k) be transferred directly to my SIMPLE IRA with the other company. The trustee for the SIMPLE IRA is telling me that I can’t deposit the money until 2 years after the first contribution to the SIMPLE IRA. Isn’t the 2-year rule meant to cover moving money OUT of the SIMPLE IRA (SIMPLE to SIMPLE okay in the first 2 years, other types of transfer/rollover after the 2 years) rather than preventing the deposit of an eligible distribution?
Permalink Submitted by Alan - IRA critic on Thu, 2018-03-01 16:34
Starting in 2016 rollovers from different plans into a SIMPLE IRA were allowed. But the waiting period for that is 2 years, the same time period required before rolling funds out of a SIMPLE IRA into a different type of plan. The SIMPLE IRA Trustee is therefore correct. You could roll the 401k balance into a traditional IRA if you do not want to wait 2 years.