Moving SIMPLE IRA Accounts

December 12th, 2006

At some point, you will want to move your SIMPLE IRA account to another financial institution. Most new investors think that you cannot move a SIMPLE IRA. The good news is the SIMPLE IRA Rules for moving SIMPLE IRA accounts are simple. A SIMPLE IRA rollover is common.

How can I move my SIMPLE IRA account?

How can a SIMPLE IRA account or SIMPLE IRA plan established at another institution be moved to a new Financial Institution?

Existing SIMPLE IRA assets may be transferred to another SIMPLE IRA account at another institution, at any time.

However, the employer’s SIMPLE IRA plan document determines whether the employee’s future salary deferrals may be deposited at any institution the employee chooses.

To bring a SIMPLE IRA account or plan to the new Financial Institution, if you are dealing with:

The Employee:

Existing assets may be transferred to a SIMPLE IRA account at the new Financial Institution. The employee will complete a SIMPLE IRA Employee IRA Agreement and the Retirement transfer form and attach an account statement from the custodian from which the assets are transferring.
Second, the employee will determine, through the Employer’s SIMPLE IRA plan document, whether he or she may direct future salary deferral contributions to Morgan Stanley.
Third, if the employer’s SIMPLE IRA plan document allows future salary deferrals to be deposited directly, the employee must communicate the change in custodian to his or her employer.

The Employer:

As the business owner, the employer will adopt the SIMPLE IRA plan by completing the SIMPLE Employer IRA Agreement.

The employer must not make any changes to the existing provisions in the plan, such as Eligibility Requirements, salary deferral mid-year change dates, employer contributions, etc., unless the document is being amended for the November 2 annual notification deadline. If this is the case, the changes to the plan document will not be effective until January 1 of the next year.

Can I rollover SIMPLE IRA?

A SIMPLE IRA account may also be rolled over to another SIMPLE IRA account. The SIMPLE IRA owner requests a distribution directly from the SIMPLE IRA custodian and has 60 days to rollover the exact amount of the distribution to a new SIMPLE IRA account. The rollover is a reportable event for tax purposes, but if completed properly, will not be a taxable event. However, this type of rollover can only be accomplished once every 12 months.

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