Hello,

I have been through the Answer books and the ASPPA books and cannot find guidance. Please help. Let’s say we have a participant named Joe who is under 59 1/2 and participatng in a SIMPLE IRA with Company A. He has satisfied the two year waiting period from the date of the first contribution, meaning he’s been with the company five years and now if he were to take a distribution it would be subject to taxes and the [b]10% [/b]penalty instead of the [b]25%[/b] penalty. Let’s say he now separates from service and shortly after goes to work for Company B who also offers a SIMPLE IRA. It is my understanding Joe will be subject to a new two year waiting period in the new SIMPLE because he is now with a new employer, but what if he transfers his old SIMPLE into his new SIMPLE? Are those old dollars from SIMPLE #1 locked into the new two year rule with SIMPLE #2? I would assume so but I am looking for some guidance. Is there anything in the Treasury Regs or IRC Code…. I do not know of any ordering rules that would allow Joe to keep those dollars separate from the 25% penalty if he were to take a distribution. I know the best advice would be to keep the old SIMPLE assets separate from the new, but is there any guidance on this if Joe has already merged the accounts? Can someone provide any source or explanation on this? Thanks! Mike