Employer SIMPLE IRA less Restrictive

Submitted by Charlie Pesiridis on Tue, 2023-01-10 15:29

Can an employer of the SIMPLE IRA plan amend the Eligibility requirements for this year (2023)? They just completed documents for the Simple Plan in December 2022 and realized they would like to make it less restrictive. Thanks.



Submitted by William Tuttle on Tue, 2023-01-10 18:16

  • I do not see an explicit prohibition or allowance for this in the tax code or IRS Notice 98-4. That which is not expressly prohibited is generally allowed.
  • One general rule of employer retirement plans is that an employer can not disadvantage or discriminate against its employees. Another general rule is that retroactive amendments cannot reduce or remove benefits.
  • Nothing I see would preclude relaxing eligibility requirements subject to the following issues.
  • This combined with the calendar year rule. Any amendment less restrictive than the current yearly terms could be done. It would have to effective on 1/1.
  • It would have to be retroactively applied to all participants. Those participants denied entry would have to equitably treated. Any missed employer contributions made and IRS specified interest applied to any delay in employee deferrals and or employer contributions.


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