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SIMPLE IRA and more than 100 ees in 2009


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I was just contacted about an employer who has 125 employees with pay over $5,000 in 2009. Last week 30 employees were still deferring into this Plan.

Does anyone have nay ideas about correcting this?

I think they should stop all deferrals to that Plan now and will need to call these after tax contributions to an IRA when they do w-2s for 2010.

Anyone else have any ideas?

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Are you sure it needs correcting? For an existing SIMPLE-IRA plan, there is a 2 year "grace period" where you are treated as meeting the 100 employee requirement - 2 years following the year in which you last satisfied the limit. So if 2009 was the first year this happened, you would be ok for both 2009 and 2010.

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