SIMPLE ROTH IRA

Submitted by Thomas Ferry on Mon, 2023-12-11 15:28

Hi
Do income limits apply to those who wish to contribute to a SIMPLE ROTH IRA?

Also, can a participant contribute to both a traditional SIMPLE and ROTH SIMPLE during the same year?



Submitted by Alan - IRA critic on Mon, 2023-12-11 16:30

Most likely no income limits and participant could split the SIMPLE contributions between the two. However, with no sign of the needed IRS regulations I doubt that any IRA custodian has permitted such contributions in 2023, and the regs will not be in place when 2024 starts either. In the meantime, after 2 years participants can still convert their pre tax SIMPLE IRA balance to a Roth IRA.



Submitted by Thomas Ferry on Mon, 2023-12-11 16:57

thank youdo you  have an expecation for when the IRS regs will be in place?



Submitted by Alan - IRA critic on Mon, 2023-12-11 19:45

No idea. Between Secure 1.0 and 2.0, the IRS is way behind the 8 ball. Of course, the legislative effective dates provided no or very little lead time for many of the provisions. 



Submitted by William Tuttle on Mon, 2023-12-11 21:41

  • Keep in mind, the Roth employee deferral and employer contribution SECURE Act 2.0 provisions are voluntary. An employer/plan is not required to amend the plan for those features.
  • Then considered that the IRS recently issued guidance delaying the start date for mandatory Roth catch-up contributions for higher income individuals. From 1/1/2023 – > 1/1/2026. It is anyone’s guess when the Roth employee deferral and employer contribution features might be available in SIMPLE IRA plans.
  • I’ll go out in a limb and suggest IRS SIMPLE IRA guidance with the issue of new Forms 5304-SIMPLE and 5305-SIMPLE would likely be needed by July or August of 2024. To allow 2025 SIMPLE IRA notice/enrollment packages to be sent out by employers by the required 11/02/24 date.
  • We are still waiting for IRS guidance and final regulations  for some provisions in the original SECURE Act and it had FAR fewer retirement plan provisions.
  • I actually have a lot of empathy for the burden Congress has dumped on the IRS. I never thought I would be saying that or this; “We should be patient.”
  • My recent experience is the vast majority of IRS employees are doing the best they can.


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