AGGREGATION--SIMPLE & TRADITIONAL 401(K)s

[Guest JROSSITTER]

May a SIMPLE & traditional 401(k) be aggregated to meet minimum coverage requirements? If so, is there still no ADP/ACP testing for the SIMPLE? (For example, SIMPLE covers only HCEs, evryone else is covered by the 401(k)with no match.)

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[Guest FredReilly]

In your case I don't see how aggregation is ever possible since a SIMPLE is not allowed for any calendar year in which a another qualified plan is in existence, perhaps with the exception of forfeiture allocations.

I have a somewhat related question, so if you have found a source of information I would appreciate it if you could advise me. You can e-mail me at fredreilly@earthlink.net.

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[This message has been edited by Gary Lesser (edited 05-17-2000).]

[Bill Berke]

I agree with Fred Reilly - IRC Section 408(p)(2)(D) says SIMPLE is kosher if no other contributions or benefit accruals credited in same year to qualfied plan. Thus can't have plan to aggregate. Also, how do you get only HCEs in the paln. Are they the only people who have earned at least $5,000 in prior two years? I don't know of any way to divide the SIMPLE eligibilty rules. IRC Section 410 doesn't apply to SIMPLEs, thus you have no eligibility designing avaliable to you.

[Gary Lesser]

Aggregation with qualified plan to meet requirements is not possible. As stated above both plans can not generally exist at the same time. If benefits are accrued or contributions made to a nonSIMPLE (or other qualified plan, SEP, SARSEP), then the SIMPLE is not valid and all contributiuons are excesses in the account and the SIMPLE IRA contribution amounts should be treated as wages.