Can a SIMPLE IRA be merged into a 401(k)

[Vlad401k]

Can SIMPLE IRA be merged into a 401(k) mid-year. I know the SIMPLE IRA cannot be terminated mid-year, but can it be merged mid-year into a 401(k) plan. If not, would it be required to wait until the end of the year, then terminate the SIMPLE IRA and rollover the assets into the 401(k) plan.

 

Thanks in advance.

[K2]

The SIMPLE has to be the exclusive plan of the employer for the whole year, so I don't think you can do a merger into a 401k.

[Bird]

Because SIMPLE IRA assets are held in...IRAs, the concept of a merger is inapplicable.  You could start a 401(k) and allow participants to roll over their SIMPLE balances, but it's their choice.  If you do start a 401(k), it invalidates the SIMPLE, so the usual recommendation is not to start a 401(k) in the same year, but if you don't mind a lot of messiness, it can be done.  That is, the 401(k) doesn't have a problem, but the SIMPLE does.

[Vlad401k]

Thank you. That was very helpful.

 

What about SEP? Can it be merged into a 401k plan or does it have to be terminated too?

 

Thanks.

[rcline46]

Remember a SEPP is really a SEP-IRA, and you have answered your own question.

[Vlad401k]

That's what I figured. Just wanted confirmation.

 

Thanks.