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Converting a SIMPLE IRA to a Safe Harbor 401k (and max the owners at 415)


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Posted

I have about a million questions.  I'm writing this as though I know these to be true but they are only educated guesses...

1) I presume the SIMPLE IRA contributions are from January 1st through let's say May 31st, be they Nonelective or Match.

2) Then, the Safe Harbor 401k contributions, be they Nonelective or Match run from June 1st through December 31st.

3) Profit Sharing / Gateway Minimum / Cross-testing / top-heavy minimums would all be based on comp data from 6/1/2024 through 12/31/2024

4) The 415 regs are crystal clear that ALL defined contribution plans are aggregated for 415 purposes so I would be targeting the 415 limits based on the sum of the above.  My plan doc already says the 415 limitation year is always a 12 month period so no need to prorate the 415 limits. 

5) I suppose I would need to pro rate the comp limit though?  That could be problematic, so I guess I might need to have a 1/1/ effective date after all and just have the 401k safe harbor contriubtions effective June 1, 2024 and determine my top-heavy minimums as 3% of 12 months of pay, offset by any Safe Harbor, and SIMPLE IRA contributions.

I think my point really is, there are so many answers to so many questions.  HAs anyone sat down and tried to figure this out?  Has ASPPA or Ferenczy or ERISApedia answered these questions at this level of detail? These are happening right now so we need a playbook...

Austin Powers, CPA, QPA, ERPA

  • austin3515 changed the title to Converting a SIMPLE IRA to a Safe Harbor 401k (and max the owners at 415)
Posted

I had similar questions 

There seemed to be disagreement among the commentators about if the replacement plan could start 1/1, but several saying no, but myself and possible Derrin any others saying yes. 

 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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