birdstothebowl32

thanks. I guess if they take the money out of the SEP into a new SIMPLE, is there a risk the IRS says both plans are no longer qualified? We agree its a significant operational failure?

Thanks. No one reported anything, this issue has just come to light now. If recordkeeper Y chooses to fix this by moving to a new SIMPLE account and providing the sponsor with documentation to hold on file, what is the risk to the administrator given we are within the SCP window? I don't think the individuals should be responsible for any penalties and can self-certify to the same.

Good morning, I have a similar question, a client had a SIMPLE plan with himself and just one other employee as participants which was opened in 2018 with Recordkeeper X. in 2019, he decided to move the SIMPLE to Recordkeeper Y so he told Recordkeeper Y to set up a new SIMPLE that would be ready to receive the rollovers. Howe/er, the client already had a SEP account with Recordkeeper Y. As you guessed, Recordkeeper Y placed the SIMPLE rollovers from Recordkeeper X into the SEP account instead of a newly established SIMPLE account (this being in 2019, its less than the 2 year rollover limit). The client only just found out about this issue now as he trusted Recordkeeper Y was doing things correctly and has been maxing out his contributions to the SEP (supposed to be SIMPLE) for 2020. I understand that the IRA holders can request a rollover back into a new SIMPLE account (which Recordkeeper Y should pay earnings on) and self-certify as to the mistake to avoid any penalties but what about the status of his original SEP and current/former SIMPLE plans; is this a significant operational failure? Does he as owner have any duty under EPCRS/VCP to correct the failures or should he just get a letter from Recordkeeper Y that they messed up acknowledging liability and keep it on record in case of audit?

Good morning, I have a similar question, a client had a SIMPLE plan with himself and just one other employee as participants which was opened in 2018 with Recordkeeper X. in 2019, he decided to move the SIMPLE to Recordkeeper Y so he told Recordkeeper Y to set up a new SIMPLE that would be ready to receive the rollovers. Howe/er, the client already had a SEP account with Recordkeeper Y. As you guessed, Recordkeeper Y placed the SIMPLE rollovers from Recordkeeper X into the SEP account instead of a newly established SIMPLE account (this being in 2019, its less than the 2 year rollover limit). The client only just found out about this issue now as he trusted Recordkeeper Y was doing things correctly and has been maxing out his contributions to the SEP (supposed to be SIMPLE) for 2020. I understand that the IRA holders can request a rollover back into a new SIMPLE account (which Recordkeeper Y should pay earnings on) and self-certify as to the mistake to avoid any penalties but what about the status of his original SEP and current/former SIMPLE plans; is this a significant operational failure? Does he as owner have any duty under EPCRS/VCP to correct the failures or should he just get a letter from Recordkeeper Y that they messed up acknowledging liability and keep it on record in case of audit?

Good afternoon, I have a similar question, a client had a SIMPLE plan with himself and just one other employee as participants which was opened in 2018 with Recordkeeper X. in 2019, he decided to move the SIMPLE to Recordkeeper Y so he told Recordkeeper Y to set up a new SIMPLE that would be ready to receive the rollovers. Howe/er, the client already had a SEP account with Recordkeeper Y. As you guessed, Recordkeeper Y placed the SIMPLE rollovers from Recordkeeper X into the SEP account instead of a newly established SIMPLE account (this being in 2019, its less than the 2 year rollover limit). The client only just found out about this issue now as he trusted Recordkeeper Y was doing things correctly and has been maxing out his contributions to the SEP (supposed to be SIMPLE) for 2020. I understand that the IRA holders can request a rollover back into a new SIMPLE account (which Recordkeeper Y should pay earnings on) and self-certify as to the mistake to avoid any penalties but what about the status of his original SEP and current/former SIMPLE plans; is this a significant operational failure? Does he as owner have any duty under EPCRS/VCP to correct the failures or should he just get a letter from Recordkeeper Y that they messed up acknowledging liability and keep it on record in case of audit?