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Timing of terminating 401(k), setting up SIMPLE IRA plan


Beltane

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Employer has maintained a traditional 401(k) plan for years but, due to downsizing, would like to terminate the 401(k) by resolution before 12/31/17 and, sometime in 2018, establish a SIMPLE IRA plan.  [My understanding is contributions to a SIMPLE IRA cannot be made in the same calendar year as any 401(k) contributions and a SIMPLE IRA is not considered a 'successor plan']

My questions are:

1) Would all balances have to be distributed by 12/31/2017 to accomplish this?

 a) If the 401(k) trust accounts are not zeroed out until early in 2018, does this mean they would have to wait until 2019 to establish a SIMPLE IRA plan?

b) if all distributions are made by 12/31/17 [final 5500 would then be for 2017], would the effective date of the SIMPLE then have to be no less than 60 days after the SIMPLE IRA notice is disseminated?

My belief is, so long as no contributions to the 401(k) plan are made in 2018 then they may establish a SIMPLE IRA arrangement and commence contributions after a 60 day notice period.  IRC 408(p)(2)(D) also mentions 'or benefits were accrued', but I believe this is in reference to DB plan accruals. 

Thanks to any responses.

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