Ervin Barham Posted August 10, 1999 Posted August 10, 1999 Sub-S company (1 person company) establishes an SEP. SEP contribution goes to brokerage account. Brokerage firm is advising that participant can take immediate distribution & rollover to IRA held at the brokerage account. Is this proper? I don't deal with SEP's very much - and I know the rules are different from qualified plans. Thanks!
MoJo Posted August 10, 1999 Posted August 10, 1999 The SEP is actually funded through an IRA. The SEP is nothing more than a "wrapper" that allows for greater contributions to the funding vehicle, which typically is just an IRA. The brokerage firm is half right - the money is immediately withdrawable from the SEP-IRA, and rollable into any other IRA. Why do they want to do this?
Ervin Barham Posted August 12, 1999 Author Posted August 12, 1999 The rollover IRA has a much larger balance for investment purposes is the reason. MoJo, you stated the brokerage firm got it half-right. What half are they getting wrong? Thanks.
Gary Lesser Posted August 16, 1999 Posted August 16, 1999 The funds can be transferred from the IRA (that is a part of the SEP) to a traditional IRA (which includes a rollover IRA) once every 365 days. However, the rollover IRA, if from a QP or 403(B) will not be able to be rolled back into a QP or 403(B) if "tained" with "SEP" or regular IRA assets. Does this help? [The brokerage account that holds the SEP assets is an IRA (a "traditional IRA"}] There may be some advantage (e.g., creditor protection, estate planning with a QP sub trust) if the assets are eventually moved back into a QP (if available).
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