Simple IRA

Submitted by Andy Reynolds on Fri, 2019-11-22 16:07

Client is a small business owner with a handful of employees. They offer a Simple IRA plan. Both custodian and client are unsure which form it was set up on (if a form was filled out at all). Client wants to move his Simple IRA account to a new custodian/advisor but does not want to move the employees accounts to the new custodian.

If both custodians allow for the new account to be set up as a Simple IRA and the old custodian will deliver the funds, what issues should we be aware of?



Submitted by William Tuttle on Fri, 2019-11-22 19:56

  • A SIMPLE IRA plan can not exist without completion of a 5304 or 5305 adoption agreement.
  • It is incomprehensible to me that custodian does not have original adoption agreement
  • The custodian must know whether it is a 5304 or 5305 plan. The required yearly notice each year by 11/2 is based on this.
  • A single SIMPLE IRA plan can be the only plan for a calendar year. A change of custodians for 1/1/2020 would have needed to be done by 11/2/2019.
  • There is a distinction between a SIMPLE IRA plan and account. Once SIMPLE IRA contributions are made to to the IRA, the belong to the account owner.
  • SIMPLE IRA accountycan be rolled over at anytime. For the first two (2) years after the first contribution they can only be rolled over to another SIMPLE IRA. After that they can be rolled over to any eligible rollover destination.
  • If it is in fact a 5304-SIMPLE plan, any participant can change custodians during the 11/2 – 12/31 enrollment period. This is right on the enrollment form.

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