Guest SCUDDESLER Posted December 12, 2002 Share Posted December 12, 2002 We have heard that a qualified plan distribution may not be rolled into an IRA that was established to hold assets contributed through a SARSEP (and vise versa). One of our clients would like to terminate its SARSEP (simply by ceasing to make future contributions to the IRAs) and roll the SARSEP assets (held in IRAs) into a newly-established qualified retirement plan (a defined contribution plan). The bank currently sponsoring the SARSEP (and holding the IRAs) claims that such a rollover is not authorized by EGTRRA's liberalized rollover rules. Is the bank's opinion correct? We think the bank is wrong and that such a rollover (from an IRA initially established to hold SARSEP contributions to a qualified retirement plan) is permissible. Your thoughts are appreciated! Link to comment Share on other sites More sharing options...
MJ Hartman Posted December 13, 2002 Share Posted December 13, 2002 the bank is wrong. In 2002 you can roll sarsep $ into a qualified plan; you can roll just about any type of IRA into a qualified plan with the new EGTRRA rules. (simple IRA's are a little more strict). You could always roll qualified plan $ into a sep anyways, because its an IRA account. I suppose if the plan document hasn't be amended for EGTRRA you'd have a problem, or if the qualified plan dosen't allow for rollovers. Both of these options are easily added by plan amendments. Link to comment Share on other sites More sharing options...
mbozek Posted December 13, 2002 Share Posted December 13, 2002 Tell the bank to read IRS pub 590 or see IRC 408(d)(3)(A). The prohibition on rollovers of IRA originated funds to an qualified plans was abolished after 12/31/01 mjb Link to comment Share on other sites More sharing options...
Gary Lesser Posted December 26, 2002 Share Posted December 26, 2002 Do note that elective contributions for the current year may not be rolled over prior to the date a notice is provided to the employees that the ADP test has been satisfied or March 15 of the following year. Link to comment Share on other sites More sharing options...
Appleby Posted December 27, 2002 Share Posted December 27, 2002 ... and that the rollover must not include amounts representing RMDs, non-deductible amounts, and amounts representing excess IRA contributions Life and Death Planning for Retirement Benefits by Natalie B. Choatehttps://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/ www.DeniseAppleby.com Link to comment Share on other sites More sharing options...
Gary Lesser Posted December 27, 2002 Share Posted December 27, 2002 ... and the qualified plan must also allow for such rollovers and specifically state that the plan types that it accepts rollovers from; in this case, a "traditional IRA". Note, too, that unlike a SEP or SARSEP IRA, a SIMPLE IRA is not treated as a "traditional IRA" and must be separately stated for this purpose. Link to comment Share on other sites More sharing options...
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