SIMPLE IRA Two-Year Rule Checker

Classify the destination and movement date before a first-two-year mistake turns a planned rollover into taxable income and a possible 25% additional tax.

Updated September 6, 2026Reviewed for IRC §§72(t)(6) and 408(d)(3)(G)IRS-sourced

What happens if I move SIMPLE IRA money during the first two years?

During the two-year period beginning with the first employer contribution, only a qualifying SIMPLE-to-SIMPLE transfer or rollover can be tax-free. A non-SIMPLE destination is a distribution, includible in income, and—if you are under 59.5 with no exception—the additional-tax rate is 25%, not merely 10%.

The anniversary date is outside the two-year period
The special early-distribution rate is 25%
SIMPLE IRA indirect rollovers count under the one-rollover rule

Source:IRC §§72(t)(6), 408(d)(3)(G), and IRS Publication 560

1. Dates and destination

First employer contribution date

Proposed movement date

Destination

Movement method

Age on movement date

2. Rollover and exception facts

Does a §72(t) early-distribution exception apply?

Prior IRA-to-IRA 60-day rollover in the preceding year?

What this checker does not decide

It does not compute taxable basis, validate a specific §72(t) exception, determine the dollar amount subject to additional tax, or confirm that an employer plan accepts the rollover. Inside the first two years, a transfer to a non-SIMPLE destination is not merely a 10% early withdrawal.

SIMPLE IRA movement questions

When does the SIMPLE IRA two-year period begin?

It begins on the first day the employer deposits a contribution into your SIMPLE IRA—not the plan-adoption date or the date you signed an election.

What can I do tax-free during the first two years?

A qualifying rollover or trustee-to-trustee transfer can go to another SIMPLE IRA. A movement to a traditional IRA, Roth IRA, employer plan, or cash is a distribution during that period; it is includible in income and may face the 25% additional tax.

When does the 25% additional tax apply?

If a taxable SIMPLE IRA distribution occurs during the two-year period while you are under age 59.5 and no §72(t) exception applies, §72(t)(6) substitutes 25% for the ordinary 10% rate.

Does the one-rollover-per-year rule include SIMPLE IRAs?

Yes for an indirect IRA-to-IRA rollover: Publication 590-A aggregates traditional, Roth, SEP, and SIMPLE IRAs. A SIMPLE-to-SIMPLE trustee transfer is not an indirect rollover and is not limited by that rule.

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