Jump to content

Simple 401k Rollover to 401k


MGOAdmin

Recommended Posts

I have a potential client that has a 401k profit sharing plan (Company A). The owner’s wife owned her own company (Company B) with a Simple plan (no kids so no controlled group issues). The wife died and now the husband owns Company B and so now they are part of a controlled group. The husband merged the plans and the money from the Simple plan was rolled into the 401k plan of Company A.

Here are my questions:

  1. What is the way to correct the rollover – simply distribute the funds out back to the participants?
  2. What if the Simple is disqualified?
  3. Does this “taint” the 401k profit sharing plan and cause it to be disqualified?
  4. How can you correct Simple money that are rolled into a 401k plan?
  5. Can Simple money ever be rolled into a 401k?
Link to comment
Share on other sites

The husband merged the plans and the money from the Simple plan was rolled into the 401k plan of Company A.

You don't say what kind of SIMPLE - IRA or 401(k) plan? I have to believe it's a plan, because if it was an IRA, each participant would have the option to leave the money where it was, or roll it to a plan, or to another IRA. So, if it was a plan, and the plans were in fact merged, then, to be precise, the word "rolled" is improperly used above; it should be "transferred." In which case I'm not sure anything is wrong. I'm not sure about all of the rules associated with SIMPLE 401(k)s because I would never use one, but in essence they are just 401(k)s with special provisions, and I don't see any reason why they couldn't be "un-SIMPLEd" to become a regular plan, which could be merged with another plan.

If it really was a SIMPLE IRA, then if each participant elected to roll the money into another plan, then again, I'm not sure anything is wrong.

Ed Snyder

Link to comment
Share on other sites

Guest jooshmore

If you contribute to your 401 (k) account, you may still contribute to a Roth IRA and/or a Traditional IRA; however, your participation in the 401(k) plan may affect your ability to take a tax deduction for any Traditional IRA contributions. It will not affect the amount you are able to contribute.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...