SIMPLE question

[The Guru]

HA! get it? SIMPLE question?

OK, you're right. Here's my question: my employer recently started a SIMPLE IRA plan for employees. In meeting with the guy today it was implied- a co-worker interpreted him the same way- that participation in the SIMPLE disqualified us from contributing to another (traditional, in my case) IRA. That didn't sound right. Is it?

[MDM]

...participation in the SIMPLE disqualified us from contributing to another (traditional, in my case) IRA. That didn't sound right. Is it?

It is not.

You can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan).

[The Guru]

Excellent - just what I was looking for. Thanks for responding!

[CoffeeAndDonuts]

MDM is correct.

One fun thing to add... I believe that all SIMPLE-IRAs support in service distributions. That means that if you have a reason to prefer the assets are elsewhere, you can transfer out without leaving employment which is typically required by 401ks. I think you may be required to keep the money there for 1 year but that's it. I had a SIMPLE-IRAs for 19 years before stumbling into that. Useful if you prefer vanguard, want a nice $900-$1000 brokerage bonus from Merrill edge with free trades, etc.

One downside is that it's treated as a typical ira for things for things like a backdoor Roth IRA conversion despite the fact that it's employer sponsored with higher limits and matching which would make it a lot more like a 401k, 403b.

[ISawTheLight]

As stated above, you can continue to contribute to your traditional IRA.  However, you are now participating in an employer-sponsored plan so your IRA contributions may not be deductible.  MDM's link also links to the IRA contribution limits.

[The Guru]

Thanks for the additional responses.

[wudged]

MDM is correct.

One fun thing to add... I believe that all SIMPLE-IRAs support in service distributions. That means that if you have a reason to prefer the assets are elsewhere, you can transfer out without leaving employment which is typically required by 401ks. I think you may be required to keep the money there for 1 year but that's it....

It is a 2 year period https://www.irs.gov/retirement-plans/simple-ira-plan-faqs-distributions