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Funding SIMPLE receivable after rollovers to 401(k)


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Client had a SIMPLE for 2013, established a 401(k) 1/1/14.

All of the participants have elected to roll their SIMPLE accounts into the 401(k) plan and the money has been transferred. Now the SIMPLE matching receivable needs to be funded from 2013. The client would like to just put the money into the 401(k) rather than re-open all of SIMPLE accounts since everyone is rolling their money anyway. While this is clearly "wrong", it does keep everyone "whole". Any thoughts on how the IRS would view this if we call it self correcting ?

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My first thought is if the company has a good relationship w/ their banker, the bank might be willing to accept the contribution check and then issue rollovers in a quick and mostly painless manner. It's where I would start.

Question: To clarify, this was a SIMPLE IRA plan under 408(p), and not a SIMPLE 401(k) plan under 401(k)(11)?

I'm uncertain from reading IRC 408(q) whether a deemed IRA under that section could receive the SIMPLE employer match or nonelective contribution. Not sure if you could restrict such an account to only accepting SIMPLE contributions.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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The financial advisor linked to the old SIMPLE accounts is not the advisor for the 401(k). He is not willing to re-open the accounts and act as a conduit.

So who else has the client checked with to see if they would act as a conduit? What about their bank (you know, the bank where the client has their business checking account, most banks do IRA accounts)? What about the trustee of the new 401(k)? I suspect the new trustee, like most trustees, would make reasonable effort to get more assets.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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