SIMPLE IRA
My client has a SIMPLE IRA and one of her participants would like to move her SIMPLE IRA account to another custodian. Does my client need to sign another adoption agreement at the other custodian or can the participant just open up a SIMPLE IRA there and transfer the assets? Can two adoption agreements be in place at one time?
Permalink Submitted by Alan - IRA critic on Wed, 2024-02-21 20:54
If this is a 5305 SIMPLE the participant cannot change the custodian from the designated financial institution (DFI). The salary reduction contributions would have to be made to the DFI, although the participant could open a transfer SIMPLE IRA elsewhere and have the contributions transferred to the new custodian. This is a hassle and probably not worthwhile.
On the other hand, if this is a 5304 SIMPLE the employee could establish a SIMPLE IRA at another custodian and provide the account info to the employer to enable contributions to be made to the new SIMPLE IRA. Contributions will then stop to the original plan.