IRS Provides Issue Snapshot on Rollovers to SIMPLE IRAs

On August 23, 2021, the IRS released an issue snapshot on the expansion of the types of plans that can roll funds over into a SIMPLE IRA. Issue Snapshots represent the IRS’ periodic research summaries on tax-related issues. This snapshot describes the SIMPLE IRA changes made by the Protecting Americans from Tax Hikes Act of 2015 (the Act).

Before the Act, SIMPLE IRAs could only accept rollover contributions from other SIMPLE IRAs. The Act expanded the types of plans from which SIMPLE IRAs can accept rollovers to include SEP IRAs, 401(k), 403(b) and 457(b) plans if specific requirements are met. Namely, the following restrictions apply:

• SIMPLE IRAs are not allowed to accept rollovers from Roth IRAs or designated Roth accounts.
• The Act only applies to rollovers made after the two-year period beginning on the date the participant first participated in the SIMPLE IRA.
• The Act only applies to rollovers that are made after December 18, 2015.
• Any rollover from a traditional, SIMPLE or SEP IRA into a SIMPLE IRA is subject to the one-per-year limit that applies to IRA-to-IRA rollovers.

Retirement plan sponsors should keep this guidance in mind as they administer participant rollovers.

Issue Snapshot - Expansion of Rollover Options Includes Savings Incentive Match Plan for Employees (SIMPLE) IRA »