Simple IRA Violation?
Two people own a business as a C-corp. Paperwork was completed to establish a Simple IRA for their business in 2012, and each of them opened accounts with a mutual fund company. BUT, they never made contributions to either of their accounts, and as far as we can tell, never notified any of their eligible employees about the plan. The Simple IRA Adoption Agreement with the mutual fund company (in lieu of IRS form 5305-Simple) shows a plan effective date of 5/1/2012.
This appears to be a violation, but I’m wondering if there might be an exception since there were no contributions for any owners or employees.
Permalink Submitted by Jose Morales on Fri, 2014-06-13 15:54
I don’t know the corrective measures that need to be taken off the top of my head, but the IRS does provide resources for these types of situations: http://www.irs.gov/Retirement-Plans/SIMPLE-IRA-Plan-Fix-It-Guide
Permalink Submitted by Dennis Prout on Fri, 2014-06-13 19:59
Thanks for the link. I’m wondering if since no contributions have been made, that we can proceed as if the plan has never existed.