IRA rollover to a SIMPLE

Submitted by Dennis D. Duffy on Tue, 2016-06-28 14:41

New law PATH ACT allows an IRA rollover to an SIMPLE.

I know there is a two year rule. What is it that has to be measured by this two year rule?



Submitted by Alan - IRA critic on Tue, 2016-06-28 16:50

During the two year period beginning on the date of the first employer contribution to the SIMPLE IRA:

  1. Funds can only be transferred to another SIMPLE IRA
  2. Distributions are taxable and subject to 25% penalty instead of 10% if no penalty exception applies

Submitted by Dennis D. Duffy on Wed, 2016-06-29 11:41

Schwab is telling me the IRA must be in existence for two years in order to roll it to a SIMPLE IRA?   The SIMPLE and the IRA have both been in exitsence for more than two years?

Submitted by Dennis D. Duffy on Wed, 2016-06-29 11:41

Schwab is telling me the IRA must be in existence for two years in order to roll it to a SIMPLE IRA?   The SIMPLE and the IRA have both been in exitsence for more than two years?

Submitted by David Mertz on Wed, 2016-06-29 16:39

  • The SIMPLE IRA must be in existence for 2 years before it can receive a rollover from anything other than another SIMPLE IRA.  Prior to the PATH Act becoming law (December 19, 2015), no rollovers were permitted into a SIMPLE IRA other than those from other SIMPLE IRAs.
  • The 2-year period is the same as for the situations that Alan described.  If the SIMPLE IRA received its first contribution more that 24 months ago, the SIMPLE IRA can receive a rollover from any traditional IRA or qualified retirement plan of the participant.
  • See 2015 IRS Pub 590 page 2, Rollovers to SIMPLE Retirement Accounts.

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