SIMPLE plan to qualified plan

[Gary]

A client has a SIMPLE plan in 2009.

The owner of my firm wants to implement a cross tested plan for client.

My understanding is that the SIMPLE plan can only be terminated at the end of 2009 and then in 2010 a cross tested plan can be implemented.

That is, a qualified plan cannot be implemented in 2009 where the SIMPLE contributions are applied to a cross tested plan for 2009.

Are we in agreement with my interpretation? Are there any other interpretations?

Thanks.

[JAY21]

My understanding is the same as yours but I'd love to be wrong. This is a problem every year when putting in new plans. You might almost consider starting the new client process with the starting question "Do you have an existing SIMPLE plan" and then introduce yourself after that.

[Bird]

That's correct, a SIMPLE can't exist in the same year as a qualified plan.