2-year wait period for converting Simple IRA money to Roth
A client opened and made his first contribution to a Simple IRA on 5/4/2017. He rolled that Simple into a new Simple account at a different custodian on 4/9/2019. Does his 2-year wait period for Roth conversion eligibility begin in 5/2017 or 4/2019? Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2020-11-18 14:41
It begins on 5/4/2017. However, the custodian of the transfer SIMPLE plan MAY but is not obligated to accept documentation of that 5/4/2017 first contribution date. If the new custodian does not accept such documentation, they may issue a 1099R showing an early distribution penalty, which will also bring into question whether the rollover (conversion) is allowed. Client would then have to deal with the IRS on this issue. Client should address this situation with new custodian to know what to expect from them.