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SIMPLE IRA mid-yr plan termination due to acquisition?

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I searched the threads and don't believe I've seen this question asked. I also don't find an answer to my question on the IRS website.


Company A sponsors a SIMPLE IRA

Company B sponsors a 401(k)

Effective 09/01/2012, Company A is merging into Company B and thus Company A will no longer exist as an entity onto itself.

The desire by the parties involved is that the SIMPLE IRA can terminate on 08/31/12 (the merger date) and that the former employees of Company A will then be eligible to immediately contribute to the 401(k) plan (the 401k provisions will be analyzed to be sure this can be accomplished from that end).

The problem/question - I can't find any guidance that addresses this situation. Every source indicates that without exception SIMPLE IRA plans must be maintained for the full year before terminating. It seems odd that the new entity would have to somehow administer/sponsor the SIMPLE IRA through the end of 2012.

The merger date is quickly approaching. Any advice or thoughts would be most appreciated!

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I would look at it as maintaining the SIMPLE IRA for the full calendar year, just that Company A ceases to exist so there are no employees and no contributions after 8/31.

Thanks much!!

That might be a more aggressive approach, but I like options and believe this is worth presenting to the client as a potential alternative assuming they can get their legal advisor on board.

For future reference and to close the loop on this thread, after posting my question, I did find an older thread that discusses a similar scenerio:


Also, again for reference, a couple related links to IRS website on the topic:



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