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A Simple IRA must be held for at least 2 years before it can be transferred tax free to a traditional IRA. A Simple IRA may be transferred to another Simple at any time.

Everything below is a straight copy from the IRS Publication 590:


Rollovers and Transfers Exception
Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. See Two-year rule, next.

Two-year rule. To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the two-year period beginning on the date on which the individual first participated in his or her employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. The two-year period begins on the first day on which contributions made by the individual's employer are deposited in the individual's SIMPLE IRA.

After the two-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA.

Additional Tax on Premature Distributions (Early Withdrawals)
The additional tax on premature distributions (discussed in chapter 1) applies to SIMPLE IRAs. If a distribution is a premature distribution and occurs during the 2-year period following the date on which the individual first participated in his or her employer's SIMPLE plan, the additional tax on premature distributions is increased from 10% to 25%.

Also, if a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the two-year rule, and is otherwise a premature distribution, the additional tax imposed because of the premature distribution is increased from 10% to 25% of the amount distributed.
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