SIMPLE IRA – Post 2-year transfer to traditional IRA
A SIMPLE IRA was established in 2019, and will be continued by the employer indefinitely.
An employee has made contributions since the inception of the SIMPLE IRA, deposits having been made by the employer according to applicable rules. Concerning the option to transfer money from that SIMPLE to the Traditional after 2-years, can the employee transfer all or any portion of his/her SIMPLE IRA balance to her existing traditional IRA? If not all, how much can be transferred – meaning, is it only balances contributed more than 2 years ago?
I have been told the 2-year transfer option only applies upon termination of the SIMPLE IRA or at the end of employment of the eligible employee. However, I haven’t seen any reference to that type of requirement or limitation in IRS materials. A reference to the answer would be most helpful.
Thank you!
Permalink Submitted by Alan - IRA critic on Thu, 2025-01-23 12:16
See Notice 98-4, QA I-4.
After 2 years has passed from the date of the first SIMPLE IRA contribution, any balance in the SIMPLE IRA can be transferred to another IRA, Roth IRA, or qualified plan. Such transfers are unlimited in number, but there is only one 60 day rollover permitted within a 12 month period.
The two year time period applies irrespective of employment or terminated employment or if the SIMPLE IRA is active or terminated.
Permalink Submitted by Jeffry White on Thu, 2025-01-23 12:27
Thank you. That comports with the plain language of all I’ve read. I’m not sure what the person who suggested the plan or employment had to terminate in order for the rollover after 2 years could occur.