full or short plan year

[Guest mparker2028]

Corporation with ongoing SIMPLE 401k will dissolve as of 11/1/06.

2 unrelated corporations that will not have any affiliation will be formed; the employees of the old corporation will be split down the middle.

I read something that I thought said Simple plan year must be full plan year (thru 12/31). Are there any exceptions in a situation like this? If it must be a full year, can both new corporations be part of the plan for the last 2 months of the Plan year (one being the new plan sponsor and one being a participating employer)?

Thanks

[Gary Lesser]

Employer contributions would have to be based on compensation "for the entire calendar year." [The only guidance issued on this subject was contained in Notice 98-4] Participants have to be sure they do not exceed the 402(g) limit amount in the aggregate for the calendar year.