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SIMPLE Plan Employer sold business


Guest TaxBill

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Guest TaxBill

The employer of a SIMPLE plan sells his/her business, and the new owner would like to maintain the SIMPLE plan for the individual participants who are still employed with the new owner. Since it's a new business Name, Tax ID#, does the new employer have to establish a new SIMPLE plan or can they amend the existing SIMPLE plan. Any rulings?????? I'm assuming that all the New employer would need to do is Amend the SIMPLE plan document to reflect these changes???

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  • 3 weeks later...

If the employer is maintaining the plan of a predecessor employer, service with the predecessor must be treated as service for the employer. So it wd seem that a readoption is needed to definately count the service. [iRC Sec 414(a)(1)]. If the plan is not the plan maintained by the predecessor, then see 414(a)(2). I do not think regulations have ever been issued for subsection (a)(2).

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