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Greetings, nbg, and welcome. You asked:

<<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?>>

You may place the 401k and ESOP money in a traditional IRA and make annual contributions to that IRA.

<<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?>>

Yes, you may roll the SEP money to the new IRA created in your first question.

<<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?>>

Yes, you may convert the 401k/ESOP IRA to a Roth IRA regardless of whether you add SEP money to it or not. You also may convert the SEP to a Roth IRA regardless of whether you first roll it to the 402k/ESOP IRA or not. New contributions to the IRA prior to the conversion to a Roth do not affect this answer. Whether you should convert any of that money to a Roth IRA is another issue entirely. That may or may not be a good idea. For details, see my my analysis in post 1567 on this board at

<<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?>>

Yes, but only after you have participated in the SIMPLE for at least two years.

<<? 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?>>

Yes, but again you cannot do so until your account is two years old. That's true even if you leave your job before then.

<<? Would the additional $2000 contributions I asked about in 1) have any effect on this?>>

No, the contributions to your IRA do not have an effect on your ability to move your SIMPLE money.

<<? 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)?>>

No money, none, nada, zilch can be transferred before two years unless you want to be taxed and pay a 25% penalty. After that, all of it can.

<<? After being rolled over, are these SIMPLE funds eligible to be converted into a Roth?>>


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