If you have a pre-existing IRA or rollover 401k plan and you’re thinking about transferring the funds into a Simple IRA rollover plan, you’re probably wondering whether or not there are any restrictions or exclusions on rollovers completed to these plans. Unfortunately, the truth is that you can’t rollover a Roth IRA, an SEP IRA or a traditional IRA into a Simple IRA account. Nor can you complete a Simple IRA rollover if you’re planning on moving money from a pre-existing 401k rollover plan. The only type of IRA that can receive monies in a rollover from a Simple IRA is another Simple IRA plan.
This may seem overly limiting, but the idea is that by making sure that only money that’s been set aside in a Simple IRA can be rolled over, they’re regulating the kind of money that goes into the account to make sure that it follows all of the same rules. Consequently, if your employer is opening up a Simple IRA for you and you already have an existing IRA account, you’ll need to keep both of them active in order to get the most benefit out of your retirement savings.
However, if you’re someone who has a pre-existing Simple IRA and you’re looking to have a rollover completed that would move your money into a traditional IRA account, then this is possible. The only requirements that you’d have to meet if you want to do a Simple IRA rollover into another type of account are the time limits and the taxation implications (if you choose to go with an indirect rollover method). This means that you can complete a Simple IRA rollover into a different type of IRA without any potentially hazardous problems.
The time limit, in this case, means that you can only roll over funds that have been invested in your existing Simple IRA for a minimum of two years. If you’ve only had your Simple IRA for a year, you’ll want to wait another year before initiating the transfer – otherwise, you could be subject to hefty fines from the government. In addition, you’ll want to request a direct Simple IRA rollover, as the indirect style of rollover can expose you to unnecessary taxes and penalties, depending on how the rollover is carried out. If you have any questions about the different types of accounts or rollovers available to you, you’ll want to consult a qualified financial advisor to ensure you make the right choices for your retirement goals.
When you meet with the advisor, you’ll want to take in all of your paperwork so that the advisor will have a complete picture of your finances. This will be helpful in case there are any accounts that you wish to transfer or consolidate, as your financial advisor will be able to determine if they can receive a Simple IRA rollover without any problems. The advisor will be able to recommend the rollover strategies that make the most sense for your financial future.