VCP for Simple IRA

[Gilmore]

An employer exceeded the 100 employee count for their Simple IRA in 2013. 2014 and 2015 they operated under the grace period, but continued to operate the plan in 2016.

They ceased contributions in May, 2016 and started a 401(k) plan in June 2016.

They are going to correct the "Employer Eligibility Failure" through VCP, completing Section A of the 14568-D for both the 100 count exception and the exclusive plan rule.

Would anyone mind confirming that neither of these failures would result in the need to request a relief of an excise tax.

Thank you.

[ETA Consulting LLC]

When they exceeded the 100 employee limit for 2013, that means that the limit is considered as met for 2013 and 2014. This would mean they continued to be eligible for the SIMPLE IRA for 2014 and 2015.

So, if they failed to get back below that limit by 2015, then they would not have been eligible for a SIMPLE IRA in 2016 and VCP is used to correct the Eligibility failure and for having another plan. For these types of Employer Eligibility Failures, there doesn't appear to be applicable excise taxes.

Good Luck!

[Gilmore]

Thank you very much.