rollover to a SIMPLE IRA

Submitted by Howard Hook on Fri, 2007-09-21 14:24

I am being told by a custodian that a client of mine cannot roll over his balance in an old SEP-IRA that he has into his current SIMPLE-IRA. I was told that he can’t even roll over money from a traditional IRA into the SIMPLE plan as well.

Is this true and does the code or regulations specifically disallow this?

Thanks as always.

Howard



Submitted by Denise Appleby on Fri, 2007-09-21 16:44

You cannot rollover or transfer assets from another retirement plan to a SIMPLE IRA. The only assets that can be rolled over or transferred to a SIMPLE IRA are assets from another SIMPLE IRA.

Cite IRS Notice 98-4



Submitted by Howard Hook on Fri, 2007-09-21 16:47

Denise,

Thank you so much.

Howard



Submitted by Alan Spross on Fri, 2007-09-21 16:59

And if he has done this in error, Pub 590 refers to the correcting (recharacterizing) procedures on pages 29 and 70.

Transfers out of the SIMPLE IRA to other plans including Roth conversions are not so restricted, other than the 2 year holding requirement. Be sure client understands the two year rule for SIMPLE IRAs per Pub 590, p 70.



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