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Simple IRA to 401k


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My boss just asked me to post this here:

We have a new client that has an existing SIMPLE-IRA plan. The client provided the needed notification prior to the 60 day deadline. Subsequent to that notification, they decided to implement a 401k plan. The financial institution told them they have to wait for 2 1/2 months before they can do this. They did not provide a cite and I couldn't locate anything in Sal's book [The ERISA Outline Book] that indicates this limitation exists.

Here's what they want to do:

1 Stop contributions to the SIMPLE-IRA effective 12/31/05.

2. Start a new 401k plan effective 1/1/06.

Can this be done?

Any thoughts? Thanks for the help!

QKA, QPA, ERPA

 

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