SIMPLE-IRA Ineligible Employer

[Doghouse]

Each member of a group of related (controlled group and affiliated service group) employers sponsored its own SIMPLE-IRA. In the aggregate, they were ineligible for the SIMPLE-IRA due to headcount. This has gone on for several years and into 2013.

It looks like the EPCRS correction is to 'fess up and stop. If that's all there is to it, would the employer still be able to set up a 401(k) plan for 2013? Would the amounts already contributed to the SIMPLE just be ignored?

Seems too good to be true

[Jim Chad]

Wouldn't those be non deductible contributions for all of the years the Employer was not an eligible enmployer? Would this mean each Participant should amend their tax returns?

[Doghouse]

You would think, but I don't see anything to that effect.