SIMPLE IRA
My client owns his own business and offers a SIMPLE IRA plan to employees. He just hired his daughter and she started working for his company earlier in 2024. She wants to open a SIMPLE IRA and fund it. She also wants to rollover her former employer’s 401(k) plan into the new SIMPLE IRA once it is open.
My understanding is that SIMPLE plans have an annual enrollment (in the fall) to start funding accounts. Given she just started a couple of months ago.
- Can she open a SIMPLE IRA now or does she have to wait until October/November to open it for 2025?
- If she can open SIMPLE IRA, can she start funding it via payroll deduction in 2024 or does she have to opt into it during the next enrollment and start funding in 2025?
- If she can open a SIMPLE IRA now, can she proceed with rolling over her former employer’s 401(k) now or is it better to wait until 2025 to do that (if she can’t fund the SIMPLE with salary deferrals until 2025)?
Permalink Submitted by Alan - IRA critic on Mon, 2024-04-29 22:04
Depends on what the employee eligibility requirements were stated in the 5304 or 5305 SIMPLE form completed by the employer.
Same as above
A rollover contribution to a SIMPLE IRA is subject to a 2 year waiting period starting from the date of the first SIMPLE IRA contribution. Of course, she can instead roll the 401k into her own traditional or Roth IRA now.