If you have a SEP IRA plan, you might want to learn about the SEP IRA rollover. Perhaps you have another account – for example , a Traditional IRA, and you’d like to complete a SEP IRA rollover. There are two different ways you can transfer funds between IRA accounts. If you select an indirect transfer, you will receive a check from your current IRA plan, but not in the full transfer amount. You will get roughly 80% of the funds via check. The plan holds back the other 20% as security for taxes that you could incur if you do not meet the Internal Revenue Service transfer rules , stating 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 establish the SEP IRA, then notify the old IRA account to transfer the assets . The transfer takes place between the two trustees directly, so you don’t need to do anything further. It’s smart to check on the transfer to confirm it has been done . If you are contemplating a SEP IRA rollover on an established Roth IRA, rethink reconsider your choice because there are tax implications involved. The Roth IRA is funded with money that has already been taxed, so that it can be withdrawn from the account tax-free. Transferring the funds from the Roth IRA to a SEP IRA will mean that the money is taxed again, a second time, when withdrawn, because those funds have been removed from a specific IRA account that’s established as a tax-deferred plan. Instead of 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 have limitations 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 annual income, with a cap of $49,000 yearly , 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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