Can I Roll My Sep IRA Into a Traditional IRA or Should I Convert to a Roth?


Arie Korving, CFP
Korving & Company LLC, Suffolk, VA

There are two issues to consider. If you roll a SEP IRA into a traditional IRA, assuming you do it right, there are no taxes to pay and your money will continue to grow tax-deferred until you begin taking withdrawals.

If you decide to roll it into a Roth IRA, you will owe income tax on the amount rolled over. However, the money will then grow tax-exempt, as there will be no taxes to pay when you begin taking withdrawals.

Be sure to know ahead of time how much you will have to pay in taxes. Also, try to avoid using some of the rollover money to pay the tax, because, depending on your age, it could trigger an early withdrawal penalty.

It’s up to you to decide which option works best. If you are unsure, you may want to consult a financial planner.

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