rollover IRA or contributory IRA with a transfer from a SEP
A client is moving funds from a SEP IRA to an individual IRA in order to do a 72t from the new IRA balance.
The custodian in setting up the new IRA has choices of a contributory IRA or rollover IRA.
Is the distinction important in this situation? Or is rollover IRA the only appropriate choice.
Permalink Submitted by Alan - IRA critic on Thu, 2025-09-25 18:49
The distinction is immaterial with respect to the operation of a 72t plan. However, typically a “rollover IRA” is considered to be limited to an IRA funded exclusively from a qualified plan, and a SEP IRA is not considered to be a qualified plan. Further, personal IRA contributions can be made to a SEP IRA in addition to the more typical SEP contributions.