SIMPLE IRA

Submitted by jmemeier on Mon, 2023-08-07 18:53

An employer, who currently sponsors a SIMPLE IRA, has created a new company and several employees will transfer from the old company to the new company. The new company has common ownership but another person will be brought in as an owner. There will be no other change for the employees, they will continue to work in the same location doing the same job duties. Can the new company open a new SIMPLE IRA right away and the employees who are transferring to the new company continue making deferrals without interruption? Or does the new company SIMPLE IRA have to have a 60 day notification/enrollment first?



Submitted by Alan - IRA critic on Mon, 2023-08-07 19:53

What are the business entities and ownership structure of the two companies, ie how much common ownership?

Submitted by jmemeier on Mon, 2023-08-07 20:17

Both old and new companies are corporations though I am not sure which corporate structure.  I did receive clarification that both companies have the exact same ownership and the third party brought in has no ownership interest today but has that opportunity in the future.

Submitted by Alan - IRA critic on Mon, 2023-08-07 23:45

With such common ownership, the new company must be covered under the SIMPLE IRA. Since their employees are former employees of the original corp, they can just continue their contributions as before. The 5304 or 5305 SIMPLE should be amended to include the name of both corps. 

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