I have a simple IRA at my office, and I want to start a 401k in 2024. Do I need to rollover the funds into 401k account?

It's a small business with 10 employees.  I spoke with my possible future advisor, and she said I had to merge the funds from my simple into the 401k.  Can I not just keep the funds where they are and start a new 401k?  I've read some rules, but I'm not clear.  It says you employer cannot have any other retirement plans.  I would only have one active retirement plan, but two accounts where funds are located.  She works for ascensus, but I want to make sure she is correct.  Thanks!

2 hours ago, rbridges said:

I want to make sure she is correct.

Not!

Those of us on the admin side have learned to take what advisors say with a grain of salt, or many grains. Often wrong but never in doubt. You can (should) terminate the SIMPLE but it's ok to leave it alone. Those accounts are essentially just IRA accounts with special funding rules. They are controlled by the employees and you can't force them to "merge" anyway.

How is the adviser, or her affiliates or friends, being compensated with respect to your new 401(k) plan? If it is based on assets under management, you would understand why she would want the IRA assets in the fold. Also, there are some providers that have a minimum threshold expectation of volume before accepting a small plan because they get compensated based on assets, such as 12(b)(1) fees. But you should have been told all of this in contemplating the arrangement.

3 minutes ago, Bird said:

Not!

Those of us on the admin side have learned to take what advisors say with a grain of salt, or many grains. Often wrong but never in doubt. You can (should) terminate the SIMPLE but it's ok to leave it alone. Those accounts are essentially just IRA accounts with special funding rules. They are controlled by the employees and you can't force them to "merge" anyway.

Thanks.  As the business owner and employer, the same rules apply to me, also?  I can just let the funds sit in the account and leave them alone while I start a 401k for 2024 with my employees and myself?

3 minutes ago, QDROphile said:

How is the adviser, or her affiliates or friends, being compensated with respect to your new 401(k) plan? If it is based on assets under management, you would understand why she would want the IRA assets in the fold. Also, there are some providers that have a minimum threshold expectation of volume before accepting a small plan because they get compensated based on assets, such as 12(b)(1) fees. But you should have been told all of this in contemplating the arrangement.

I'm not sure how she's compensated.  I know we have to pay a small fee ($44/employee) until the accounts hit a certain threshold.  I'm interested in the 401k b/c it allows me to stick back more money, but the stocks in my simple have performed well, and I really don't want to roll them into mutual funds.  

A 401(k) plan can be designed to allow investment in individual stocks. It depends on the product that the provider is offering. Plans with fewer assets and fewer participants tend to have fewer options and less flexibility because they cannot support the related greater administrative complexity and attention - or greed of the provider, depending on your point of view. This is a subject that an adviser should cover. The first questions should be about what you want or are trying to accomplish.

7 hours ago, QDROphile said:

A 401(k) plan can be designed to allow investment in individual stocks. It depends on the product that the provider is offering. Plans with fewer assets and fewer participants tend to have fewer options and less flexibility because they cannot support the related greater administrative complexity and attention - or greed of the provider, depending on your point of view. This is a subject that an adviser should cover. The first questions should be about what you want or are trying to accomplish.

Sadly, I think I was talking to an adviser.  Fortunately, I was able to reach someone else in the company, and I spoke to Schwab who I have my simple.  Both said what everyone else mentioned; I can keep the funds in my simple account and not have to rollover.  I'm ok with using mutual funds in the 401k if I'm starting over.  I'm 54, so I'm probably going to use a target date fund in the 401k.