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I have a client that recently converted s corp (solely owned ) to an partnership llc (store manager of 16 years). This happened 1/18/2018. They had been contributing to a simple ira 3% match. Store manager (who has been taking a payroll check of $65,000/yr) just told me that she is only taking draws, stopped getting a payroll check upon conversion 1/18/18. She is telling me that company tax preparer has no issue with her not taking a paycheck and that she needs to convert company plan to something that would allow her to make pretax contributions without having to take a paycheck (earned income)? they have not hired someone else to fulfill the responsibilities in the operation. Any ideas? Can the partners make pretax contributions and company match 3% on draw? Is there something I'm missing about her moving to partnership status.stopping the $65k/yr earned income via payroll and only receiving a draw of the exact $65k and not having an explanation of who is the workload? Thanks in advance for any guidance.

Our client terminated their SIMPLE plan effective 12/31/17, and started a profit sharing plan on 1/1/18. They would like to make a contribution this week to the profit sharing plan for 2018, and they've already funded their 2017 SIMPLE. Their fiscal year is 3/1 through 2/28. Are they able to deduct both the 2017 SIMPLE contributions and the 2018 profit sharing contribution on their 3/1/17 - 2/28/18 tax filings? They are two distinct plan years, but would be deducted in the same tax year. Thanks for any insights -

We are establishing a SIMPLE using the 5305 form as a business that has been in operation for years, but we have never had a retirement plan. The IRS notes that the election period can be amended if the plan is established between January 1, and October 1. Does this mean that we can reduce the 60 day election period, and enroll our employees immediately if they all turn in their form?

We have some unresponsive SIMPLE IRA participants who are terminated with their employer. Is it possible to do some kind of "force-out" distribution similar to 401(k) accounts under $5000? I am struggling to find specific information about this process. Thanks!

Ok, I know this one has been covered before, but I am not certain it has been addressed in the following manner. Regarding mid-year amendments to SIMPLE IRAs, the IRS has provided some guidance in the form of an LRM (2005 LRM) and a 2012 Newsletter suggesting that a mid-year amendment is not permitted. However, what isn't clearly addressed is what portion of the code/regulations the IRS is relying on to come to their conclusion as well as what the consequences would be. My thoughts are as follows: Since SIMPLE IRAs are governed solely by IRC 408(p) and Notice 98-4 (the LRM and Newsletter to not qualify as code/regulations), and Notice 98-4 clearly states that an employee must be provided with annual notices (e.g. summary description and right to defer, including right to select financial institution if applicable) prior to November 2 of each year; a mid year amendment affecting the information required to be in such notices would result incorrect notices having been provided and thus, not meeting the notice requirements. That being said, my understanding is that the consequence would be a $50/day penalty (pursuant to Notice 98-4, Q&A section G). Beyond that, I am not aware of any additional consequences formally provided in the code/notice. The SIMPLE IRA fix it guide addresses the situation and simply provides that a reasonable correction should be made. As a result, it would seem to me that if a sponsor was willing to accept a $50/day penalty and make reasonable corrections (depending on the situation), a mid-year amendment could be made. Is there anything I am missing or any other portion of the code/notice for SIMPLE IRAs that I haven't considered that prohibits mid-year amendments? Thoughts are greatly appreciated.

Hello, I posted this topic at bogleheads.org and was recommended that I post here as well. Hoping for any help I can get. When I became eligible to receive employer contributions into an IRA account, I went to my credit union (since my wife and I have several accounts there already). I had no knowledge of the different types of IRAs and simply told them that I needed an IRA account to accept employer contributions. The teller opened a traditional IRA for me, apparently not realizing that this was the wrong account to accept matching contributions from an employer. My employer began sending checks to this account (flagged as SIMPLE contributions) with my contribution plus a matching amount, and no red flags were raised. This was in January of 2014. Fast forward to three weeks ago. My credit union's IRA department was internally audited, and my account was flagged as being coded incorrectly—it couldn't accept contributions to a SIMPLE IRA, because the credit union does not offer a SIMPLE IRA. News to me. I'm currently opening a new SIMPLE IRA account to accept future contributions, but I need to get the money that was incorrectly placed in the traditional IRA out and into the SIMPLE, where it should have been all along. Both my employer and myself have filed our taxes as if the account was a SIMPLE this whole time, so technically it shouldn't make a difference to the IRS if the amount that moves to the SIMPLE is identical to the amount my employer reported contributing. The traditional IRA would be closed as if it never existed (because it shouldn't have). How do I do this without incurring some sort of penalty? It's not a rollover, nor am I withdrawing funds early—the credit union simply made an error and opened the wrong account for me. Any suggestions would be extremely welcome. I've tried to research this online and it seems to be such an oddball occurrence that I can't find mention of it anywhere. Thanks, Ryan

Can you set up a profit sharing only plan (not 401k) in the same year that a SIMPLE plan exists? I know you can't have a 401k and SIMPLE in the same year but I was wondering if it made a difference if the second plan was employer only contributions? Thanks

Last year, my company burned through their 100+ employee grace period with the SIMPLE IRA. This year, around January 10th, (5 days before our first paycheck of the year), we were informed that the company could no longer offer the SIMPLE program. This sounds a lot like the employer is breaking several rules. 1. Operating a SIMPLE IRA with over 100+ employees (as of January 9th, of this year, employees knew nothing of the situation) 2. Terminating the SIMPLE plan without giving employees 60 days notice 3. Terminating the SIMPLE plan mid year My employer claims to be searching for a 401k program, and hopes to have one available within the next few months. Several employees are considering leaving this employer and would like to know if anyone has thoughts / ideas as to what may be done to handle this situation from the employee's perspective.

I have a potential client that has a 401k profit sharing plan (Company A). The owner’s wife owned her own company (Company B) with a Simple plan (no kids so no controlled group issues). The wife died and now the husband owns Company B and so now they are part of a controlled group. The husband merged the plans and the money from the Simple plan was rolled into the 401k plan of Company A. Here are my questions: What is the way to correct the rollover – simply distribute the funds out back to the participants? What if the Simple is disqualified? Does this “taint” the 401k profit sharing plan and cause it to be disqualified? How can you correct Simple money that are rolled into a 401k plan? Can Simple money ever be rolled into a 401k?