SIMPLE plan

Submitted by Wendy Mommaerts on Mon, 2020-08-03 15:40

We have a SIMPLE plan that was established in 2015 with the requirements of 5k compensation for current year and 5k compensation for any 1 year preceding. The company has an employee who will meet these requirements. My question is, does this employee have to wait until 11/1/20 – 12/31/20 to enroll?
If I’m reading the 5304-SIMPLE correctly, the employee is eligible anytime of the year as long as they will meet the requirements and 11/1/20 – 12/31/20 is only for the employees that want to make changes to their contribution?



Submitted by Alan - IRA critic on Mon, 2020-08-03 17:11

  • Is the employee first becoming eligible now as a result of making 5k in current year?  If so, the following paragraph in Notice 98-4, Q E 1 would allow employee to participate now.
  • “During these 60-day periods, employees have the right to modify their salary reduction agreements without restrictions. In addition, for the year in which an employee becomes eligible to make salary reduction contributions, the employee must be able to commence these contributions as soon as the employee becomes eligible, regardless of whether the 60-day period has ended.”

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