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401k to SIMPLE


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Employer wants to term 401(k) by 12/31/2008 and have a SIMPLE 401(k) for 2009.

Existing 401(k) plan has participant loans. Can the Employer continue to allow any loan repays to the 401(k) through the time that the actual distributions are completed or does that consitute "maintaining" within the same year?

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Freeze the 401k effective the end of 2008 so that no further contributions are made or benefits accrue under that plan. You can then start your SIMPLE Treas Reg § 1.401(k)-4©(1). Then let the loan repayment schedule run its course before terminating the frozen 401k plan.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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ok - I wanted to be sure that if the Employer allowed the loan repays to continue to the 401(k) that they wouldn't be considered to be "maintaining" the 401(k) in the same year as the SIMPLE. I did know that the contributions had to stop, but did not know that the plan could be frozen and thereby allow the loan repays.

Thanks much for the input!

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