Simple 401K rollover to 401k

[Guest cbcadmin]

Under the new regs, are there any restrictions on the rollover of funds from an employer's simple 401(k) plan to the same employer's new 401(k) plan effective 1/1/2002. A CPA is indicating it must be first rolled into an IRA then rolled into the 401K. Is this true?

[Appleby]

The CPA is wrong.

Suggestion?- get a new CPA who understands the regs

[Guest cbcadmin]

I presume then your answer means there are no restrictions. An employee who was a participant in the simple 401(k) can roll their account balance directly into the new 401(k)? Thanks!

[Appleby]

Yes.

See the rollover chart at http://www.tagdata.com.

Note, generally when assets are being moved between qualified plans that belong to the same employer, the movement is done as a transfer (not reportable on a 1099-R) not a rollover....except when the delivering plan is terminated

[Earl]

does the two year participation rule still apply to SIMPLE plans requiring that two years from date of first deposit pass before any distribution (rollover or otherwise) to avoid the excise tax?

thanks....

[MJ Hartman]

since a simple 401(k) is merely another form of 401k plan that has limitations of deferral/match amounts in its formula why does the plan need to be terminated at all? why not just amend the plan to a full 401k effective 1/1/02? this avoids the distribution/rollover issue altogehter.