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SIMPLE IRA 401(k) Controlled Group

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I'm going to research the boards on my own too, but as usual the person asking needs an answer in 20 minutes.

Person A owns 100% of Co. Y and 100% of Co. Z

Co Y has had a SIMPLE IRA for years

Co Z has had a 401(k) for years

That is a no-no.

We're trying to help him fix the SIMPLE IRA first. I know you can file through VCP, but I'm not sure of the end result.

The SIMPLE IRA excluded eligible employees and under VCP corrective contributions have to be made. Two questions:

1. Would the IRS consider the contributions made to the 401(k) on behalf of Co. Z employees as corrective contributions?

2. If Co. Z makes corrective contributions for the SIMPLE IRA failure, won't they be tainted since they sponsored a 401(k) in those years?

Thanks for any guidance

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I was a able to find a little more the past few minutes. I think if they file through VCP and request that the SIMPLE IRA contributions be allowed to remain they will be okay with that part.

Any thoughts on whether contributions made to and opportunities to participate in the 401(k) plan will mitigate corrective contribution that may have to be made for the Co. Z employees would still be appreciated.

Thank you

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  • 4 years later...

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