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410(b) Coverage Transition Period and SIMPLE IRA


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I recently discovered our client is a part of a controlled group (newly established in 2019) and one entity maintains a SIMPLE IRA and the other a 401(k) Plan. Good news, we're still within the exclusive plan transition rule under 408(p). Bad news is we're beyond the 410(b) transition rule. What now? In addition, if the SIMPLE remains and those employees are NOW eligible for the 401(k) plan, does the (k) plan need to be amended to exclude the employees benefitting under the SIMPLE IRA plan or are those employees eligible to participate under both plans if they so desire so long as they don't exceed the 402(b) limit? If the employees could be eligible for both plans, is there a coverage test for the 401(k) plan if all employees are "eligible" under the 401(k) plan? 

Also, just to confirm, I'm right that if the employees previously employed under the entity who sponsored the SIMPLE IRA plan are now working under another entity within the controlled group, such employees must still be eligible for the SIMPLE IRA (contributions coming from an entity who does not sponsor the SIMPLE IRA) as if the plan sponsor of the SIMPLE IRA were still a separate entity, correct?

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