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Posted

I have a new prospective client that currently has a SIMPLE IRA plan that has been in place for over 5 years and has 15 employees. I want to make sure that the advisor is relaying the correct information to the client. The advisor has told them that moving to a 401k would allow them to receive the start up credit plus the employer contribution credit plus the automatic enrollment credit.  Does this sound right?  

Posted

Because the credits are intended to encourage employers to establish new plans, they are not available if the employer has maintained a qualified plan, simplified employee pension or Simple IRA plan for substantially the same group of employees in any of the three taxable years immediately preceding the first year for which the credit is allowable.  IRC §45E(c)(2) and (f)(4).

Tom Veal

ERISA Cavalry PLLC

www.ERISACavalry.com

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