SIMPLE IRA Plan

Submitted by Brian Kuhn on Thu, 2017-11-02 18:48

Company establishes a SIMPLE today 11.2.2017. States in the plan document eligibility is the most restrictive, $5k in the prior year and $5k in the current year. Does that imply that no one would be eligible until 2018 since there is no prior year in which to earn $5,000 or more in?

Second question – Employees of this new company are part of another company with common ownership. Can that time count toward the accomplishing of $5k prior and $5k current?

Third Question – Can an employer choose to make eligibility for a SIMPLE plan a matter of time like 12 months, rather than the prior year/current year compensation expectations?

Fourth Question – Does the 2 year wait on one’s ability to rollover prior 401k money to this SIMPLE start from the plan’s inception, or that individual participant’s enrollment?

Thanks,



Submitted by David Mertz on Thu, 2017-11-02 21:03

  • If the company (or the other company under common ownership, see the next bullet) was in existence on or before October 1, 2017, the deadline for establishing a SIMPLE IRA to receive contributions for 2017 was October 1, 2017 and no contributions for 2017 would be permitted, regardless of employee eligibility requirements.
  • If the two companies have common ownership, the two companies comprise a controlled group and all employees of both companies would be considered to be employed by a single employer for the purposes of the SIMPLE plan.
  • For a SIMPLE IRA plan, you cannot add more restrictive requirements than those in section 408(p); you cannot add a service-time requirement.  You *can* have less restrictive eligibility requirements.
  • The 2-year period begins on the date of the first SIMPLE contribution to the employee’s SIMPLE IRA account.

Submitted by William Tuttle on Thu, 2017-11-02 21:35

The plan was not established on 11/2/17. This the latest allowed notice date for a plan beginning on 1/1/2018, 60-days minimum notice required prior to 1/1/2018. The plan is not effectively establshed until 1/1/2018. Then, if an employee has compensation >= $5K in 2017 and is reasonable expected to have compensation >= $5K in $2018, they are eligible to contribute for 2018 

Submitted by Brian Kuhn on Fri, 2017-11-03 16:26

Thanks very much.  Most helpful discussion board in the industry. 

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