The immediate income tax consequences of a Roth conversion and a distribution to a brokerage account are the same, you'll pay ordinary income tax on the distribution from the SIMPLE IRA account. However, if you are under age 59½, in addition to income taxes, if you distribute the money to a nonqualified brokerage account you'll also be subject to a 10% early-distribution penalty on the taxable amount (likely the entire amount) of the distribution from the SIMPLE IRA. A conversion to Roth is not subject to early-distribution penalties and, if left in the Roth IRA for 5 years or until you reach age 59½, whichever comes first, the amount converted will be able to be distributed from the Roth IRA tax and penalty free.
Later, there will be tax benefits to the conversion to Roth over simply distributing the money to a brokerage account. If the requirements are met, growth in the Roth IRA will be tax free while growth in the brokerage account will be subject to taxation of capital gains and dividends.
