AlbanyConsultant Posted February 25, 2013 Share Posted February 25, 2013 I have a client who wants to terminate their 401(k) and start a SIMPLE 401(k). There have been no employee deferrals to the 401(k) plan this year, but the two outstanding loans have continued to be repaid. Does that violate the rule about not "benefitting" under another plan this year? Thanks. Link to comment Share on other sites More sharing options...
masteff Posted February 25, 2013 Share Posted February 25, 2013 The trick is to find the more precise definition than the semi-vague "benefiting". IRS Code 401(k)(11)(C ) "Exclusive plan requirement The requirements of this subparagraph are met for any year to which this paragraph applies if no contributions were made, or benefits were accrued, for services during such year under any qualified plan of the employer on behalf of any employee eligible to participate in the cash or deferred arrangement, other than contributions described in subparagraph (B)." My opinion is that loan payments are NOT contributions nor accrual of benefits and therefore would not violate this rule. Mike Preston and MWeddell 2 Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra Link to comment Share on other sites More sharing options...
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