simple ira two year period
Three months ago I transferred my simple/ira account with financial firm A to a simple/ira with financial firm B. I contributed to firm A’s simple/ira for over two years before I transferred it to B. My employer has been the same throughout. May I now roll over my entire accumulated balance in B to an IRA and avoid the 2 year penalty? I would like clarification whether the two year period applies to the specific account (B) or to the overall period of contribution through my employer (A&B together).
Thanks!
Permalink Submitted by Alan Spross on Fri, 2008-07-25 21:04
The two year period begins with the date of your first contribution to a SIMPLE IRA, regardless of how many accounts you have had in the interim. Here is a copy of Sec 72(t)6 which applies here:
(6) Special rules for simple retirement accounts
In the case of any amount received from a simple retirement account (within the meaning of section 408(p)) during the 2-year period beginning on the date such individual first participated in any qualified salary reduction arrangement maintained by the individual’s employer under section 408(p)(2), paragraph (1) shall be applied by substituting “25 percent” for “10 percent”.
And here is the section that indicates if 72t indicates a penalty, it also is not a permitted rollover for a SIMPLE IRA:
(G) Simple retirement accounts
In the case of any payment or distribution out of a simple retirement account (as defined in subsection (p)) to which section 72(t)(6) applies, this paragraph shall not apply unless such payment or distribution is paid into another simple retirement account