If you have a Simple IRA and are moving to a new company, you’re going to want to take your investments with you when you leave. This is possible, but there are some limitations that you’ll first need to take into consideration before making any decisions on your Simple IRA rollover. For example, if your Simple IRA account has been open for less than two years, you won’t be able to rollover the account without serious penalties of up to 35% percent of the total account balance. As this can significantly damage your retirement holdings, you may need to wait to complete the Simple IRA rollover to your new account until the two years have elapsed.
Something else to consider is that if you’re starting a new Simple IRA account with your new employer, the only type of IRA that can be transferred into the account is another Simple IRA. So, if you’re thinking about moving funds from a Traditional IRA or 401k plan to your new employer’s plan, you won’t be able to transfer the funds if your new employer’s account type is a Simple IRA. In this case, you’ll need to keep both of these retirement plans open to make sure that you’re getting the most out of your money.
If you’ve recently opened a new Simple IRA and you want to move funds into it from another retirement plan into this account, this is only possible if the funds are coming from another Simple IRA. On the other hand, if you meet the two year requirement and you’re looking to complete a Simple IRA rollover out of the Simple IRA and into a different type of account, then this is also possible, with a few exceptions. One thing to remember if you’re performing a Simple IRA rollover is that it’s far easier to do a direct transfer, rather than an indirect one. This means that the funds that are coming from the Simple IRA rollover will be transferred directly between the banks without any third party interference.
Another thing to consider is that if you’re moving your money from a Simple IRA plan into a Roth IRA plan, you’ll need to pay taxes on the money that’s being taken out of the Simple IRA. This is because the money that’s deposited into Roth IRAs has already been taxed, while the money in the Simple IRA hasn’t. However, the upside is that when you withdraw the money later in life, you won’t have to pay taxes on your withdrawals. Even if taxes go up in the future or you find yourself in a higher tax bracket upon retirement, the money that’s been put into the Roth IRA is protected.
As you can see, when you’re setting up your new Simple IRA rollover account, there’s a lot of information to consider. The good news is that you should have a lot of options available – just don’t get too overwhelmed by the little details! A qualified financial planner should be able to help you clarify any points that you find confusing.