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This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan.
Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as:
Part of a 401(k) plan, or
A plan using IRAs (SIMPLE IRA).
This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs.
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Can you transfer a traditional IRA into a sep IRA?
Yes
Can you roll a traditional IRA into a simple IRA?
A Savings Incentive Match Plan for Employees individual retirement account, or SIMPLE IRA, allows small business owners to set up a retirement plan for employees without the paperwork involved in establishing a 401k plan. It's possible to make contributions to a SIMPLE IRA, traditional IRA and a Roth IRA at the same time, although it's not always wise to do so.
What are some differences between a Traditional IRA Rollover and Transfers?
The main difference between a traditional IRA rollover and a transfer is that a rollover is the special type of tax-free transfer of a retirement account into an IRA.
What kind of IRA accounts are there?
There are many kids of IRA accounts. Traditional IRA, ROTH IRA, SIMPLE IRA and a few more are the various kinds of different IRA accounts. Traditional IRA accounts are one of the more common IRA but are also the most basic and simple to use.
Can you have both a Simple Ira and Roth Ira?
Yes, the limitation does not apply between a SIMPLE IRA and a Roth/Traditional. However, because a SIMPLE IRA is a "qualified retirement plan" offered by your employer, you may not be able to get a traditional IRA deduction- all depends on your income situation.
Can a sep IRA be converted to a traditional IRA?
Technically, the SEP IRA and the Traditional IRA are the same type of account. The only difference is that the SEP IRA is allowed to receive employer contributions. Therefore, you can combine the SEP IRA into the Traditional IRA without any ramifications. When doing so, move the assets as a (nonreportable) trustee-to-trustee transfer.
How can an individual convert a traditional IRA to a Roth IRA?
Rollover - A distribution from a traditional IRA can be contributed to a Roth IRA within 60 days after distribution. Trustee-to-trustee transfer - The financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA with another financial institution. Same trustee transfer - As with the trustee-to-trustee transfer, the financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA. In this case, things should be simpler because the transfer occurs within the same financial institution. Note...A conversion results in taxation of any untaxed amounts in the traditional IRA. I did this, and had to pay the taxes on the money, before it went into a roth. The IRS spread the tax payments over a 4 year period, and was sure to send me a reminder every year at tax time, to make sure I didn't forget!!
What is the advantage of a roth ira over a traditional ira?
The main advantage of a Roth IRA over a traditional IRA is that you're not socked with withdrawal penalties under most circumstances. You can also transfer the earnings to a beneficiary if the account holder dies. One thing to note is that you DO pay tax on contributions to a Roth IRA, unlike a traditional IRA.
Can you contribute to a simple IRA and a traditional IRA in the same tax year?
Yes you may, and neither the Simple nor the Traditional IRA is affected by contributions to the other. The maximum amount for the Simple IRA for 2010 is $11,500 plus a $2,500 catch-up for folks 50 years old and older. The Traditional/Roth IRA maximum contribution amount for 2010 is $5,000 plus a $1,000 catch-up amount for folks 50 and older.
What are the simple rules set out by the IRA?
There is a wide range of information available on IRA's in the US. Some of the simple rules set out for IRA's are to contribute, know the difference between Roth and traditional IRA's and pay attention to the costs.
Are there different types of IRAs?
There are 5 different types of IRAs for you to choose from. They are: traditional IRA, Education IRA, Roth IRA, Simple IRA, and SEP IRA which means Simplified Employee Pension.
Is a simple IRA taxable?
Contributions to a SIMPLE IRA, or Savings Incentive Match Plans for Employees, are not taxable. Contributions made to an IRA are, in fact, tax deductible. There are limits on how much one can contribute to an IRA each year, and on how much one can deduct. Distributions from an IRA (whether Traditional or Simple), however, are indeed taxable.
