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Can a SIMPLE IRA be merged into a 401(k)


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Can SIMPLE IRA be merged into a 401(k) mid-year. I know the SIMPLE IRA cannot be terminated mid-year, but can it be merged mid-year into a 401(k) plan. If not, would it be required to wait until the end of the year, then terminate the SIMPLE IRA and rollover the assets into the 401(k) plan.

 

Thanks in advance.

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Because SIMPLE IRA assets are held in...IRAs, the concept of a merger is inapplicable.  You could start a 401(k) and allow participants to roll over their SIMPLE balances, but it's their choice.  If you do start a 401(k), it invalidates the SIMPLE, so the usual recommendation is not to start a 401(k) in the same year, but if you don't mind a lot of messiness, it can be done.  That is, the 401(k) doesn't have a problem, but the SIMPLE does.

Ed Snyder

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