Under EGTRRA can SAR-SEP money merge into a 401(k) Plan

[Guest lmoser@sunamerica.com]

In prior legislation it was not possible to rollover SAR-SEP money into a 401(k) Plan. Has that changed under EGTRRA? Can a SAR-SEP now open a new 401(k) document and transfer their SAR-SEP balances to the 401(k) Plan?

[Guest edavis@sunamerica.com]

A SAR-SEP IRA is essentially an IRA in most cases. As a result, SAR-SEP assets should be portable to qualified plans. The only restriction that comes to mind is that the SAR-SEP must pass the deferral percentage test under IRC 408(d)(7) prior to rollover.

[Appleby]

The movement of assets from a SARSEP is done as a rollover- not a transfer.

EGTRRA did make it permissible for assets held in SARSEP to be rolled to qualified plans, 403(B) and 457 (B) plans.

With reference to the passing the ADP test, the only restriction is that the contribution for the current year should not be distributed (including rolled to another plan), before the earlier of the 125% test being completed or March 15. The rest of the assets may be rolled/distributed at any time.

[davef]

How are people interpreting the IRS model EGTRRA amendments as they relate to allowing rollovers of SEP dollars into a qualified plan? Notice 2001-57 seems to cover only rollovers from IRAs under IRC Sec. 408(a) and 408(B). There is no mention of IRC Sec. 408(k). Is this an oversight, or are you interpreting the rules to cover SEPs under 408(a)? Or am I missing something?