Jump to content

Establishing a new plan


Recommended Posts

Can someone point me to some guidance that says if I want to have a plan effective 1/1/2017 I can send out my initial notices after 11/1? I get that for an existing plan I need to have the notice out by 11/1 but it seems to me that if the plan does not yet exist there should be some room.

This is what it says under 408(p):

© each employee eligible to participate may elect, during the 60-day period before the beginning of any year (and the 60-day period before the first day such employee is eligible to participate), to participate in the arrangement, or to modify the amounts subject to such arrangement, for such year.

The IRS FAQ's don't seem to address what to do in November and December. And I can't find any articles!

Austin Powers, CPA, QPA, ERPA

Link to comment
Share on other sites

  • 4 weeks later...

Outstanding. Spot-on.
https://www.irs.gov/pub/irs-irbs/irb98-02.pdf

Q. E–1: When must an employee be given the right to enter into a salary reduction
agreement?
A. E–1: During the 60-day period immediately preceding January 1 of a calendar year (i.e., November 2 to December 31 of the preceding calendar year), an eligible employee must be given the right to enter into a salary reduction agreement for the calendar year, or to modify a prior agreement (including reducing the amount subject to this agreement to $0). However, for the year in which the employee becomes eligible to make salary reduction contributions, the period during which the employee may enter into a salary reduction agreement or modify a prior agreement is a 60-day period that includes either the date the employee becomes eligible or the day before that date. For example, if an employer establishes a SIMPLE IRA Plan effective as of July 1,
1997, each eligible employee becomes eligible to make salary reduction contributions on that date and the 60-day period must begin no later than July 1 and cannot end before June 30, 1997.

Austin Powers, CPA, QPA, ERPA

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...