Guest ButchElfers Posted April 7, 2003 Posted April 7, 2003 If a company who is offering a SIMPLE IRA is having financial trouble, can they terminate the SIMPLE IRA in mid year? If yes, what steps must they take to shut the plan down? They already have used the 1% contribution percentage in 2 of the last 5 years, so terming the plan is the only option. For 2003, they are supposed to make a 3% match. I appreciate your help!!
Gary Lesser Posted April 10, 2003 Posted April 10, 2003 Yes, the excess is reported in box 1 (and not deducted on Form 1040). Although they do not seem to be subject to the 6% tax (no spot on Form 5329, because its not treated as a "traditionall IRA" for purposes of that tax), the excess sd still be dealt with by the participants. I'd provide a notice explaining what happened and how/when it sd be corrected. The notice will be helpfull to the trustee in coding this as a nontaxable excess. Gain cd be taxable and may be subject to the 10% penalty if not 59-1/2.
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