25% penalty in 1st 2 years

[Guest bmurphy]

Company adopted a SIMPLE plan with Custodian A in 1999. May 2003 plan was transferred to Custodian B. Does the 2-year rule regrading the 25% penalty for early withdrawals start with the employee's first date of participation with Custodian A or does it re-set when the plan moved to Custodian B?

[Belgarath]

I interpret it to be the 2 years from when the employee first starts participation with A.

[Appleby]

Agreed. The two year period begins when the first contribution is deposited to the participant’s SIMPLE account.