How to Move a SIMPLE IRA
A SIMPLE plan, or Savings Incentive Match Plan for Employees, is an individual retirement account (IRA)-based plan that employers can establish to provide retirement contributions for themselves and for their employees. While some of the characteristics of a SIMPLE IRA plan differ from other retirement plans--for example, only an employer with fewer than 100 employees can establish a SIMPLE IRA plan--the basics of the account transfer process are similar to those of other types of brokerage accounts. However, there is an important variation when those transfers occur within the first two years of contribution.
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Instructions
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Verify the length of time since your contributions. If you attempt to transfer or roll over your SIMPLE contributions within two years, your funds must be moved to another SIMPLE IRA plan if you wish to avoid taxation. The Internal Revenue Service clearly states that If you transfer your SIMPLE funds to any other type of IRA within this two-year window, that transaction will not be considered a tax-free transfer but rather a fully taxable distribution.
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Establish another IRA account and make a trustee-to-trustee transfer. In order to move your SIMPLE funds, you must open another tax-deferred account, such as an IRA, to receive them. If you are shifting funds between employers and your new employer already has a SIMPLE IRA plan in place, then most of the work has been done for you. Simply contact the administrator of your new plan, inform him of your intention to make a trustee-to-trustee transfer of your old SIMPLE IRA, and provide him with necessary account details, such as the name and address of your former employer, and your account number. Generally, your most recent account statement should suffice. If you are outside of the two-year IRS restriction window, you can set up your own IRA account at any financial services firm and provide it with similar information about your intention to transfer.
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Roll over your funds. Although the trustee-to-trustee transfer method is usually the safest and quickest, you can also request a rollover of your SIMPLE IRA funds. Using a rollover, you will receive a physical check for the amount of your transfer, and it is your responsibility to deposit those funds in a new account within 60 days. While a rollover can be used as a short-term loan, if you fail to replace the funds within the 60-day window, the entire amount of your rollover becomes taxable.
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