Skip to main content
No. of Recommendations: 0
OK…I'm confused. I've gotten several different responses from people (including the administering brokers) to these questions, and I don't feel any closer to answers. Can someone help? (I apologize in advance that this post became so long.)

This is my current situation:

I rolled over a 401(k) from a previous employer into a new traditional IRA, and I plan to add another rollover into that same IRA from my ESOP account held by the same employer (I thought about taking the stock, but only for a minute—no one in their right mind would voluntarily invest in the type of company for which I used to work).

Additionally, just this week my current employer began a SIMPLE IRA for all employees. The SEP IRA that used to be his retirement plan will receive one final employer contribution for the last calendar year. After that contribution, the SEP will be discontinued.

These are my questions:

1) I have no interest in keeping the funds from my 401(k) and ESOP segregated for possible future rollover into another employer-based plan. I'd rather have the flexibility to invest how and where I choose. Therefore, can I make my yearly $2000 contribution into the IRA created from these defined contribution plans, or, regardless of my future intent, must I keep all monies from my old employer's plans untainted?

2) Once the SEP at my current employer is discontinued, can I rollover those funds into the IRA originally created from the old 401(k)/ESOP funds, or must it remain in a separate IRA?

3) Can I convert the IRA holding the 401(k)/ESOP funds into a Roth IRA? Will new contributions or a SEP addition affect this answer? If the SEP funds must be separate, could it be converted into a Roth?

4) In the Disclosure Statement distributed with the literature for the new SIMPLE IRA, the section under Transfers and Rollovers says:

“Distributions from a SIMPLE IRA may also be rolled over into a regular IRA after you have participated in the SIMPLE IRA for 2 or more years.”

 Does this mean that even though the plan remains active, receiving both my employer's and my contributions, that I may roll these funds out of the SIMPLE and into a traditional IRA?
 If so (or even if I must wait until I no longer work for this employer), could that IRA be the same one I created with the 401(k) funds?
 Would the additional $2000 contributions I asked about in 1) have any effect on this?
 Could all funds in the SIMPLE be rolled over, or only the monies that have been in the account for 2 years (thus requiring continuous quarterly transfers, for instance, to remove 2 year old monies)?
 After being rolled over, are these SIMPLE funds eligible to be converted into a Roth?

I hope these questions didn't come out too convoluted, and any clarity that can be shed will by much appreciated!

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.