IRA to simple as transfer or direct rollover (and not 60 day rollover)???
confused on options for moving money from IRA/retirement to a simple and not have it coded as a 60 day rollover. Either the IRS language on transfer vs rollover is being used “loosely” (see below), or if the IRS is using it technically, it appears there may be a way to process this as a transfer or direct rollover and avoid it coded as a once per year/60 day rollover….
IRS website indicates: (https://www.irs.gov/retirement-plans/simple-ira-withdrawal-and-transfer-rules)
Transfers to SIMPLE IRAs:
Previously, a SIMPLE IRA could only accept transfers from another SIMPLE IRA plan. A new law in 2015 now allows a SIMPLE IRA to also accept transfers from traditional and SEP IRAs, as well as from employer-sponsored retirement plans, such as a 401(k), 403(b), or 457(b) plan. However, the following restrictions apply:
-SIMPLE IRAs may not accept rollovers from Roth IRAs or designated Roth accounts of employer-sponsored plans.
-The change applies only to rollovers made after the two-year period beginning on the date the participant first participated in their employer’s SIMPLE IRA plan.
-The new law only applies to transfers to SIMPLE IRAs made after December 18, 2015, the date of enactment.
-The one-per-year limitation that applies to IRA-to-IRA rollovers also applies to rollovers from a traditional IRA, SIMPLE IRA, or SEP IRA into a SIMPLE IRA.
thoughts? input? please????
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-26 21:18
The IRS is constantly interchanging the useage of the terms transfers and rollovers. In this case they described a rollover as a type of transfer. EIther method can be used to move TIRA funds into a SIMPLE IRA after the 2 year waiting period. A 60 day rollover will count toward the one permitted for all IRA to IRA rollovers during a 12 month period. A direct transfer does not count against such limit and is always the best way to move funds since direct transfers are unlimited in number..
Permalink Submitted by Lisa Doherty on Tue, 2022-04-26 21:38
thank you for your feedback!! it doesnt seem the clearing firms are honoring a direct transfer option for IRA to simple. but you believe that it can be done and would avoid the “once per year” issue? that would be amazing, but not sure others are aware of this….
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-26 22:39
Yes, the clearing firms should be accepting direct transfers. The following link makes it clear that both methods are allowed.
Microsoft Word – 0116SIMPLERoll.doc (pension-specialists.com)
Permalink Submitted by David Mertz on Wed, 2022-04-27 11:48
I can’t find any specific IRS guidance regarding a trustee-to-trustee transfer to a SIMPLE IRA from an IRA that is not a SIMPLE IRA, but it seems that such a trustee-to-trustee transfer pursuant to IRS Revenue Ruling 78-406 should be permitted because the restriction on the movement of funds to a SIMPLE IRA disappears upon the SIMPLE IRA reaching the 2-year mark. Given the absence of specific guidance, though, perhaps the clearing firms are just being cautious about allowing such transfers.
I’m not sure what the benefit would be for the participant to move funds to a SIMPLE IRA from an IRA that is not a SIMPLE IRA other than to consolidate accounts for simplicity.