[quote=”greggguiol73″]This is concerning a client who currently has an existing SIMPLE IRA @ American Funds. The client made a contribution to that account late last year, which it turns out will be his last SIMPLE IRA contribution, because he has since retired…

Being that the all of the contributions within the plan have not fully aged (the two year rule – being able to go from SIMPLE to Traditional) the client now simply wants to open a like account and do a Trustee to Trustee transfer of these assets (SIMPLE IRA to SIMPLE IRA).

My question is, in attempting to establish the new SIMPLE account with the new broker dealer, they are telling me that being that the client is now retired, he cannot open a SIMPLE account and effect the transfer…He must stay within the SIMPLE IRA where it is at until the funds have properly aged and then at that point execute a transfer from SIMPLE to Traditional.

This didnt seem very logical, that the client would be forced to maintain the existing account at the firm in which it originated…Meaning in a nutshell, that he is locked up now with American Funds for another year and a half or so…

Please let me know thoughts…

Many thanks…[/quote]

If he will no longer be funding the SIMPLE IRA, and his [b]first SIMPLE contribution [/b]has aged two years, he should transfer to a traditional IRA. There is no need for him to maintain/open a new SIMPLE IRA.

See this link for an explanation and appicable cites http://www.retirementdictionary.com/definitions/2yearrulesimpleira

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The two-year period starts with the first deposit. For instance, if he made a SIMPLE IRA contribution on March 5, 2006, his SIMPLE IRA has satisfied the two-year requirement as of March 4, 2008. Any contributions made after March 5, 2006- including those made in 2008 , would have met the two-year requirement.

Has his first contribution aged at least two years?

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