SIMPLE 401K and SIMPLE IRA Controlled Group

[delmar16]

I understand that SIMPLE plans are subject to the controlled group rules (i.e. all members of the controlled group are treated as a single employer for qualified plan requirements).

While as a parent company has SIMPLE 401K plan, can a subsidiary company have SIMPLE IRA in the same year? Contribution percentage will stay the same.

The most of the employees will be transferred to a subsidiary company, and parent company will be as a holding company.

[John Feldt ERPA CPC QPA]

SIMPLE plans have an "exclusive plan" requirement. As I understand it, you can only have one SIMPLE and all members of the controlled group must be covered by that one plan.

[delmar16]

Thank you.

Where can I find the source of information about this?

[Belgarath]

The SIMPLE Form instructions.

[John Feldt ERPA CPC QPA]

Is this what you're looking for (below), or are you looking for the definition of "employer" that includes all of the members of the controlled group/affiliated service group of employers?

Treasury Regulation Section 1.401(k)-4 SIMPLE 401(k) plan requirements.

(a) General rule. A cash or deferred arrangement satisfies the SIMPLE 401(k) plan provision of section 401(k)(11) for a plan year if the arrangement satisfies the requirements of paragraphs (b) through (i) of this section for that year.

© Exclusive plan -

(1) General rule. The SIMPLE 401(k) plan must be the exclusive plan for each SIMPLE 401(k) plan participant for the plan year. This requirement is satisfied if there are no contributions made, or benefits accrued, for services during the plan year on behalf of any SIMPLE 401(k) plan participant under any other qualified plan maintained by the employer. Other qualified plan for purposes of this section means any plan, contract, pension, or trust described in section 219(g)(5)(A) or (B).

(2) Special rule. A SIMPLE 401(k) plan will not be treated as failing the requirements of this paragraph © merely because any SIMPLE 401(k) plan participant receives an allocation of forfeitures under another plan of the employer.

[John Feldt ERPA CPC QPA]

https://www.irs.gov/retirement-plans/simple-ira-plan-fix-it-guide-your-business-sponsors-another-qualified-plan