How to Transfer a SIMPLE IRA to a Self-Directed IRA LLC

Individuals may generally transfer IRA or rollover eligible qualified retirement plan assets into a self-directed IRA LLC structure. Individuals may also roll over after-tax retirement funds to a Self-Directed SIMPLE IRA.

What is the most Common Way to Fund a Self-Directed SIMPLE IRA ?

Transfers and rollovers are types of transactions that allow movements of assets between like IRAs – Traditional IRA to Traditional IRA, including Savings incentive match plan for employees of small employers (SIMPLE). An SIMPLE IRA transfer is the most common method of funding a Self-Directed SIMPLE IRA LLC.

Note – SIMPLE IRA assets may be rolled over to a Self-Directed SIMPLE IRA anytime, however, SIMPLE IRA assets may be rolled over to a 401(k) qualified retirement plan, 403(b) plan, governmental 457(b) plans or a Traditional IRA only after a two (2) year waiting period is met. Though, a 401(k) qualified retirement plan, 403(b) plan, or governmental 457(b) plan may not be rolled into a SIMPLE IRA. Also, a Roth IRA cannot be rolled into a SIMPLE IRA.

Rollover Chart

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IRA Rollover Chart

SIMPLE IRA Transfers to a Self-Directed IRA

A SIMPLE IRA-to SIMPLE IRA transfer is one of the most common methods of moving assets from a SIMPLE IRA to Self-Directed SIMPLE IRA LLC. A transfer usually occurs between two separate financial organizations, but a transfer may also occur between SIMPLE IRAs held at the same organization. If a SIMPLE IRA transfer is handled correctly the transfer is neither taxable nor reportable to the IRS. With a SIMPLE IRA transfer, the SIMPLE IRA holder directs the transfer, but does not actually receive the IRA assets. Instead, the transaction in completed by the distributing and receiving financial institutions. In sum, in order for the SIMPLE IRA transfer to be tax-free and penalty-free, the IRA holder must not receive the SIMPLE IRA funds in a transfer. Rather, the check must be made payable to the new IRA custodian. Also, there is no reporting or withholding to the IRS on an IRA transfer.

The retirement tax professionals at the IRA Financial Group will assist you fund your Self-Directed SIMPLE IRA LLC by transferring your current SIMPLE IRA funds to your new Self-Directed SIMPLE IRA structure tax-free and penalty-free.

How the SIMPLE IRA to Self-Directed IRA Transfer Works?

Your assigned retirement tax professional will work with you to establish a new Self-Directed SIMPLE IRA account at a new FDIC and IRS approved IRA custodian. The new custodian will then, with your consent, request the transfer of your SIMPLE IRA assets from your existing IRA custodian in a tax-free and penalty-free IRA transfer. Once the IRA funds are either transferred by wire or check tax-free to the new SIMPLE IRA custodian, the new custodian will be able to invest the SIMPLE IRA assets into the new SIMPLE IRA LLC “checkbook control” structure. Once the funds have been transferred to the new SIMPLE IRA LLC, you, as manager of the SIMPLE IRA LLC, you would have “checkbook control” over your retirement funds so you can make traditional as well as non-traditional investments tax-free and penalty-free.

60-Day Rollover Rule

An individual generally has sixty (60) days from receipt of the eligible rollover distribution from a SIMPLE IRA account to roll the funds into a Self-Directed SIMPLE IRA LLC structure. The 60-day period starts the day after the individual receives the distribution. Usually, no exceptions apply to the 60-day time period. However, in cases where the 60-day period expires on a Saturday, Sunday, or legal holiday, the individual may execute the rollover on the following business day.

An individual receiving an eligible rollover distribution may rollover the entire amount received or any portion of the amount received. The amount of the eligible rollover distribution that is not rolled over to an IRA is generally included in the individual’s gross income and could be subject to a 10% early distribution penalty if the individual is under the age of 591/2.

How the 60-Day Rollover Works with a Self-Directed SIMPLE IRA

The retirement tax professionals at the IRA Financial Group will assist you in rolling over your 60-day eligible rollover distribution to a new FDIC and IRS approved IRA custodian. Once the 60-day eligible rollover distribution has been deposited with the new IRA custodian within the 60-day period, the new custodian will be able to invest the SIMPLE IRA assets into the new IRA LLC “checkbook control” structure. Once the SIMPLE IRA funds have been transferred to the new IRA LLC, you, as manager of the SIMPLE IRA LLC, you would have “checkbook control” over your retirement funds so you can make traditional as well as non-traditional investments tax-free and penalty-free.

Self-Directed IRA Transfer Experts

The retirement tax professionals at the IRA Financial Group will assist you in transferring your SIMPLE IRA tax-free and penalty-free to a “checkbook control” self-directed SIMPLE IRA LLC solution. Each client of the IRA Financial Group will work directly with an assigned retirement tax professional to establish the Self-Directed SIMPLE IRA LLC solution and make sure that the self-directed IRA transaction is structured in the most tax efficient manner and is not in violation of any IRS rules.

To learn more about the Self-Directed IRA transfer or direct or indirect rollover rules, please contact a tax professional at 800-472-0646.


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