Jump to content

New SIMPLE IRA if Employer Makes Last Qualified Plan Contribution afte

Recommended Posts

Assume Employer A has a qualified plan with a calendar year plan year. In 1999, Employer A terminates the plan. In 2000, Employer A establishes a SIMPLE IRA. In the first quarter of 2000, Employer A makes the last contribution to the terminating qualified plan. Question: Does the last contribution to the qualified plan in the year the SIMPLE IRA is established cause the exclusive plan rule to be violated? Notice 98-4 states that an employer is considered to be maintaining another qualified plan if any employee receives an allocation of contributions for any plan year beginning or ending in the calendar year. Here, the right to the contribution was earned in the preceding year, but the contribution was made in the following year. Any thoughts would be sincerely appreciated.

Link to comment
Share on other sites

Guest Fishchick

It seems that this would be okay since the 401k plan contribution was allocated for the prior year, not the year for which the SIMPLE IRA plan is effective. The allocation of the contribution "officially" takes place during 1999, even though the contribution is made later in your example.

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...