Rollovers to a SIMPLE 401(k)

[Guest ak]

Can a SIMPLE 401(k) accept rollovers from any other eligible plan. IRS sample plan language (including the model amendment in Rev. Proc. 97-9) indicates that it can. Past industry comments I've seen seem to indicate that the answer is "yes". However, I've seen a recent comment from a reputable firm which takes the position that rollovers to a SIMPLE 401(k) from any eligible plan, including another SIMPLE 401(k), have never been allowed (under pre/post EGTRRA). The position is based on the specific language in the Code that basically says a SIMPLE 401(k) plan may only receive elective and matching contributions (Code Sec. 401(k)(11)(B)(i)(III). This firm's position is that the IRS's interpretation exceeds its authority under the statutory provision and that until there is some clarification or further guidance, rollovers to SIMPLE 401(k) plans shouldn't be allowed. I understand this is their interpretation but I'd like to know what interpretations others have on this. What do you tell your clients?