Simple IRA rollover to a Roth IRA while still employed

Submitted by John Garza on Tue, 2020-01-07 01:19

I have a client that owns a small business and offers a Simple plan to himself and employees. He would like to start converting some of his Simple IRA monies to a Roth IRA while still employed by his company. Can he do so? He is 63 years of age and has had the plan for more than 2 years.

Thanks,
John



Submitted by Alan - IRA critic on Tue, 2020-01-07 01:52

Yes, he can convert to a Roth IRA directly from the SIMPLE IRA. 

Submitted by John Garza on Tue, 2020-01-07 02:52

If my client has $300,000 in his simple ira with the company is there a limit on how much he can rollover/convert to a Roth IRA in a given year?Thanks,John

Submitted by Alan - IRA critic on Tue, 2020-01-07 15:08

No limit, but converting a large amount will increase his marginal tax rate and the conversion will cost more, quite possibly more than client’s tax rate in retirement. Normally, conversions are done in modest amounts to keep the cost down, but individual circumstances may vary.

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