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Simple 401(k) PLan


Guest Dee Kratz

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Guest Dee Kratz

A company has terminated ther Simple IRA Plan as of December 31, 2002. They want to distribute the funds soon after that date. The company needs to make the matching contribution for 2002 and wants to wait until April, 2003 to deposit the funds.

Where should the company deposit the match since the IRA's would have been closed?

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Please clarify question. 401(k) simple plans do not utilize IRAs. Also, if a 401(k) SIMPLE, is entire plan being terminated? If so, matching contributions must be made before the plan is terminated; otherwise their will be no plan to accept the matching contributions and the elective contributions will become excess contributions. If a SIMPLE-IRA, the matching contributions can be made into the SIMPLE-IRAs. If they no longert exist because the individuals/owners have closed them out, then new ones will have to be created to receive the contributions.

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Guest AFRICA6796

Gary,

Am I wrong in thinking that an employer has one year after the plan is terminated by which to distribute the assets?

If this is correct, then technically, the plan could be officially terminated and contributions made after the effective date of the termination.

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As far as I am aware of, contributions may not be made after a qualified plan is terminated (although distributions may be made from a terminated plan). You might wish to ask this Q on one of the other message boards.

The original Q was headed SIMPLE 401(k) Plan.

If a SIMPLE IRA, I have no problem with contributions being made into the SIMPLE-IRAs after year end; the SIMPLE IRAs are not terminated merely because the employer discontinues the SIMPLE IRA PLAN effective as of the first day of the following year. Keep in mind the SIMPLE IRA plan is adopted by the employer. The SIMPLE-IRAs are adopted by the employees; the employer can not terminate the SIMPLE IRAs.

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