Vesting Service going from SIMPLE to 401(k)

[dmb]

If a new 401(k) plan is being established where there was previously a SIMPLE plan, can vesting service prior to the effective date of the 401(k) plan be excluded or must service under the SIMPLE plan be counted?? Thanks.

[Blinky the 3-eyed Fish]

Only a qualified plan can be a predecessor plan for this purpose, therefore is it a SIMPLE-IRA or a SIMPLE-401(k)? The former is not a qualified plan and therefore would not be a predecessor plan, but the latter is a qualified plan. Of course you also don't state how long ago the SIMPLE was maintained. If it was more than 5 years, then it definitely doesn't count as a predecessor plan.

(I found a spelling error and we can't have that now.)

[dmb]

Thanks. The SIMPLE will end this year and the 401k will start in 2005, but you answered my question. Knowing the IRA wasn't a qualified plan, i was a little unsure about the SIMPLE 401k. Thanks again.