Simple IRA to 401(k)
A business client would like to fold their Simple IRA plan into a 401(k). They have been running the Simple IRA since 2019.
We’ve heard the employees can roll their Simple IRA funds into a new 401(k) to consolidate, or they can leave it as is. However, they have some employees that started in the past month, leading into the 2-year rule. Can they do anything mid-year? For example, could they start the process of moving from Simple IRA to 401(k) now, or do they have to wait until the end of the year? What about those that just started contributing to the Simple IRA? Any other “gotcha” items when doing this migration? Thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2022-03-28 22:02
The SIMPLE IRA is a calendar year plan and must be the only plan maintained in 2022. They can only switch to a 401k on 1/1/2023 after notifying employees of the SIMPLE plan termination by 11/2/2022 effective 1/1/2023.
Permalink Submitted by brcwm on Mon, 2022-03-28 22:26
What about those with new accounts (new employees) that just started to participate? Can those be rolled over into the new 401(k) (or personal IRA) or do they have to sit in the Simple IRA for the remaining two years?
Permalink Submitted by Alan - IRA critic on Tue, 2022-03-29 00:03
They must remain in the SIMPLE IRA or another SIMPLE IRA until 2 years has passed from the date of the first SIMPLE Contribution.