SIMPLE IRA and another plan?

[Guest PMiller]

Our local library is considering a SIMPLE IRA plan. Currently, they have 1 employee making pre-tax contributions to a non-ERISA 403(b) with a mutual fund family. Does the fact that this 403(b) arrangement exists prevent them from setting up a plan this year since the sponsor can't make contributions to another qualified plan in the same year? Thanks.

[Gary Lesser]

The other entity may establish a SIMPLE IRA, however, the individual is still subject to the overall 402(g) limits.

There are also transitional rules that might apply to the qualified plan. When there is an acquisition (or disposition) among a controlled group of employers , the minimum qualified plan coverage requirement is treated as having been met during the transition period if the minimum coverage requirement was met before the acquisition and there is no other significant change in coverage. [i.R.C. §410(b)(6)©; Treas. Reg. §1.410(b)-2(f); Priv. Ltr. Rul. 9707022]