Rollover Basics

• A rollover simply takes funds from one qualified retirement plan and moves it into a new one. Types of qualified accounts are IRA, 401k, 403b or SEP IRA plans. When done properly, the rollover is a tax-free move that gives the investor control over where assets are held and how they are invested. The IRS allows you to rollover SIMPLE IRA assets into a 401k but there is a time requirement to do so.
  
  

Two-Year Rule

• The two-year rule is specific to SIMPLE IRAs. Under the rule, a SIMPLE IRA owner can only rollover a SIMPLE IRA plan into another SIMPLE IRA at a new employer if the original plan was established less than two years earlier. The owner must own the SIMPLE IRA for a minimum of two years before it can be rolled into anything other than another SIMPLE IRA. Keep in mind that you do not need to be employed for two years; the SIMPLE only needs to be established with its first contribution two years earlier.
  
  

Roll Into 401k

• After the two years are satisfied, the IRS allows you to roll the SIMPLE IRA assets into a new employer's 401k plan. While the IRS allows this movement into a 401k, not all 401k plan administrators do. It is the discretion of the plan and the employer to offer this option. Check with your new employer's 401k plan administrator to see what the allowances are and what the procedure is.
  
  

Considerations

• There are pros and cons to rolling the money into a new employer plan. One pro is that you're keeping all retirement assets under one account to track and monitor more easily. You also will most likely save money on annual fees because a 401k plan invests a group's money with discounted rates, partially paid by the employer. One con is not having the same amount of control over your money as you would in a self-directed IRA. Most 401k plans only offer limited mutual fund options, perhaps with company stock options. Self-directed IRAs can own bank savings, securities, real estate, precious metals and even private corporation ownership.