SEP IRA Rollover – System and Simplicity
If you have a SEP IRA plan, you may want to learn about the SEP IRA rollover. Maybe you have another account – for instance , a Traditional IRA, and you’d like to do a SEP IRA rollover. There are two different ways you can move money between IRA accounts. If you choose an indirect transfer, you will get a check from your current IRA plan, but not in the full transfer amount. You will receive roughly 80% of the money via check. The plan holds out the other 20% as security for taxes that you might incur if you do not meet the Internal Revenue Service transfer rules , specifically that you have just 60 days to deposit the money in the SEP IRA account. Once the funds are placed, the 20% mandatorily held can be released. Deciding on a direct SEP IRA rollover is easier , and a cleaner transaction. You first set up the SEP IRA, then contact the old IRA account to transfer the funds . The transfer takes place between the two trustees directly, so you don’t have to do anything further. Be sure to check on the transfer to confirm it is complete . If you are considering a SEP IRA rollover on an established Roth IRA, rethink reconsider your choice since there are tax implications involved. The Roth IRA is funded with money that has already been taxed, so that it will be withdrawn from the account tax-free. Transferring the money from the Roth IRA to a SEP IRA will mean that the money will be taxed again, a second time, when withdrawn, because those funds have been removed from a specific IRA account that’s established as a tax-deferred plan. Rather than performing the Roth to SEP transfer, you can establish a SEP IRA for future contributions and leave the existing funds in your Roth where they can grow tax-free until you withdraw them , tax free, at retirement. If you qualify for a SEP IRA, there are certain advantages you should consider . With a traditional IRA rollover account, you are limited on the amount you can contribute from the SEP IRA rollover account annually . The current amount is $5000. However, if you have SEP IRA accounts you are allowed to contribute up to 25% of your yearly income, with a cap of $49,000 annually , without having to pay taxes. If you qualify for a SEP IRA rollover from a traditional IRA account, this could be an excellent opportunity to accelerate your retirement goals.
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