Setting up a SIMPLE IRA plan after a 401(k) plan is terminated.

[katieinny]

I've been under the impression that an employer can set up a SIMPLE IRA plan in the year immediately following the year a 401(k) plan is terminated. I can see where a SIMPLE 401(k) could be considered a violation of the 1 year rule, but I don't believe the SIMPLE IRA plan comes under the same restriction. Any opinions on this?

[Blinky the 3-eyed Fish]

You are correct that a SIMPLE IRA is not considered a successor plan and will not cause any problems with the allowance of the distributions.

[mbozek]

SIMPLE plan can not be established for any year in which benefits accrue for participants under another plan ( e.g., forfeitures).