Can I have a plan if I have SIMPLE?

[Jakyasar]

Hi

Looking to set up a combo plan (CB+DC) and I now was informed that the client has a SIMPLE.

Scenario 1: Not yet funded the SIMPLE for 2020, can I set up both plans? No deduction issues, correct?

Scenario 2: Funded SIMPLE for partial 2020, what can be done if anything?

Thank you

[Bird]

You can't have a SIMPLE in the same year as any other plan.  The general thinking is that creating a new plan(s) invalidates the SIMPLE, so if contributions have been made...well, that's where it breaks down a bit for me; it's messy and ugly but I think they can be disgorged as excess IRA contributions or perhaps treated as regular IRA contributions if under the appropriate limit (but they went to a SIMPLE not an IRA).  But the new plan(s) actually has no problem.

[Calavera]

Just be sure your client really has a SIMPLE plan. Sometimes they have SIMPLIFIED, i.e. SEP, and they just call it SIMPLE.

[Jakyasar]

Hi

 

It is SIMPLE, fully funded, per potential client as they used PPP and employees are purring monies in every payroll. 2/3 into the year, not a good idea to deal with the excess IRA issues so will do the plan for 2021.

What are the steps to close down the SIMPLE as of 12/31/2020? Never dealt with it before.

There is no problem signing 2021 plans in December 2020, correct?

Thank you

[Bill Presson]

20 minutes ago, Jakyasar said:

Hi

 

It is SIMPLE, fully funded, per potential client as they used PPP and employees are purring monies in every payroll. 2/3 into the year, not a good idea to deal with the excess IRA issues so will do the plan for 2021.

What are the steps to close down the SIMPLE as of 12/31/2020? Never dealt with it before.

There is no problem signing 2021 plans in December 2020, correct?

Thank you

1. https://www.irs.gov/retirement-plans/terminating-a-simple-ira-plan

2. No issue with signing in December 2020

[Jakyasar]

Thank you Bill

[Bill Presson]

36 minutes ago, Jakyasar said:

Thank you Bill

You're welcome!