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Is a Simple IRA considered a Traditional IRA?

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Level 15
Level 15

Is a Simple IRA considered a Traditional IRA?

In general, no. IRS Publications 590-A and 590-B say "A traditional IRA is any IRA that isn't a Roth IRA or a SIMPLE IRA."

But why exactly are you asking? Some, but not all, of the rules for a traditional IRA also apply to a SIMPLE IRA.


Level 15

Is a Simple IRA considered a Traditional IRA?

Yes, a SIMPLE IRA is a type of traditional IRA.  However, it has special restrictions.  It's only permitted to receive elective salary deferrals and employer contributions deposited by your employer, and during the two year period beginning on the date the first contribution is made to the SIMPLE IRA it is not permitted to accept rollovers (except from another SIMPLE IRA) and early-distributions are subject to a 25% penalty instead of the normal 10% penalty (unless a penalty exception applies).  During that two year period transfers and rollovers from the SIMPLE IRA are only permitted to be made to another SIMPLE IRA.

Is a Simple IRA considered a Traditional IRA?

For purposes of pro-rating your tax on distributed basis, a SIMPLE IRA is lumped in with all your other Traditional IRAs.

See Form 8606 Line 6.

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