How to Transfer a SEP-IRA

The easiest way to transfer a SEP is to just fill out a trustee-to-trustee transfer form and let the plan's trustee take care of completing the transfer. Because your money goes straight from one account to another with no distribution to you, a trustee-to-trustee transfer won’t affect your taxes.

"If you make a tax-free rollover of a distribution from an IRA," the IRS explains, "you generally cannot make another rollover from the same IRA within a one-year period. You also cannot make a rollover from the IRA to which the distribution was rolled over."

Transferring a SEP through direct distribution means SEP funds are transferred from the original plan trustee to you. Direct distribution can be handy if you want to close the SEP account but haven’t made a firm decision on a new retirement account where you want to transfer the funds. You have 60 days to make a rollover contribution to another retirement plan. If you miss the 60-day window or decide not to transfer the funds you’ll have to pay income taxes and an early distribution penalty on the money you received.

Read the rules if you decide you want to transfer a SEP by rolling it over. Although most trustees accept SEP rollover transfers, some don’t. The IRS says you can roll over a SEP IRA to a Roth IRA, a traditional IRA or another SEP at a new institution. You can also roll a SEP to a different type of retirement plan like a 401(k) or a 403(b). You can’t roll a SEP into a SIMPLE IRA or a designated Roth 401(k) or Roth 403(b).

Do your homework before deciding where to transfer your SEP IRA. Make sure the investment options in the new retirement plan are in line with your retirement plan. For example, make sure the new plan has trade options if you want to manage retirement funds on your own. If you’re considering opening a Roth IRA, make sure you understand you’ll have to include the entire amount of the transfer on your income tax for the current year. This is because a SEP is tax-deferred and a Roth IRA isn’t.