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Don’t hesitate to consolidate IRAs

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q. I have a SIMPLE-IRA, while my husband has a SEP-IRA and a traditional IRA. We’re both in our 50s. Can we consolidate these into traditional IRAs? B.R.M., Sioux City, Iowa

A. Yes. Your husband can shift funds from a SEP-IRA to his traditional IRA through a rollover. No tax withholding is required if a trustee-to-trustee transfer is used.

Similarly, you can roll over funds tax-free from a SIMPLE-IRA to a traditional IRA. But you must have been participating in the SIMPLE for at least two years. Otherwise, the transfer will be treated as a taxable distribution.

Tip: Consolidating accounts may make it easier for you to coordinate retirement plan investments.

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