Simple IRA inservice Rollover/Transfer

Submitted by Ryan Smith on Wed, 2019-02-27 13:46

We have a client that is 64 years old that is an active participant in a Simple IRA plan. While still employed can he do a partial transfer/rollover to an IRA of some of his account balance and still continue to contribute and receive the employer match. Does it matter if he is the owner of the business? Does being over 59.5 matter? Thanks.



Submitted by William Tuttle on Wed, 2019-02-27 14:47

  • For the first two years after the first contribution, a SIMPLE IRA can only be rolled over to another SIMPLE IRA.
  • After two years a SIMPLE IRA is treated the same as a traditional IRA for distribution purposes. Any amount can be rolled over to any other retirement plan at anytime without affecting contributions.
  • Whether there are any fees or costs for the rollovers are subject to custodian’s policies and investments. Unfortunately many SIMPLE IRA plans are thru advisors with high loads, high expense ratios and/or high AUM fees.
  • Another consideration is whether this is a 5304-SIMPLE or a 5305-SIMPLE. With 5304 each participant can select their own custodian. With a 5305 all contributions must go to the designated financial institution DFI. However, the DFI must allow each participant to elect to make fee-free investments and roll them over to a custodian of their choice at least monthly with no fees or costs.
  • It does not matter what his age is. Other than the two-year rule there are no restrictions. It does not matter if he is the owner. In fact as owner if a 5305 plan, he could change the plan from a 5305 to a 5304.

Add new comment

Log in or register to post comments