Midyear replacement of SIMPLE IRA with SH 401k - effective dates

Company is looking to terminate their SIMPLE IRA ASAP and replace with a Safe Harbor 4% match 401k in 2025. Soonest possible would be 6/1/2025 after giving the 30 day notice for Simple Termination. Would the effective date of the 401k be 6/2/2025? Or would the effective date of the 401k Plan be 1/1/2025 with a special start date for deferrals as of 6/2/2025? I would assume the plan would begin 6/2/2025, but I know Safe Harbor Plans should be in place for the full year. Is that not a requirement if doing a mid-year simple replacement? 

The Smple Plan is set up for a 3% match. Would that be pro-rated the same as the Safe Harbor Match? Ie,a 3% Simple IRA match for half the year + 50% of the SH match for half the year would be an effective match of 3.5% on 4% deferred for 2025?

Also, he says he notified employees via email in December of 2024 that the Simple IRA was terminating. No deferrals/contributions have been made in 2025. Would that notice work? Or does it need to include language regarding the replacement with the SH 401k?

Can you fix your dates and ask again?

17 hours ago, 401KIA said:

Company is looking to terminate their SIMPLE IRA ASAP and replace with a Safe Harbor 4% match 401k in 2025. Soonest possible would be 6/30/2025 after giving the 30 day notice for Simple Termination. Would the effective date of the 401k be 6/2/2025? Or would the effective date of the 401k Plan be 1/1/2025 with a special start date for deferrals as of 6/2/2025? I would assume the plan would begin 6/2/2025, but I know Safe Harbor Plans should be in place for the full year. Is that not a requirement if doing a mid-year simple replacement? 

The Smple Plan is set up for a 3% match. Would that be pro-rated the same as the Safe Harbor Match? Ie,a 3% Simple IRA match for half the year + 50% of the SH match for half the year would be an effective match of 3.5% on 4% deferred for 2025?

Also, he says he notified employees via email in December of 2024 that the Simple IRA was terminating. No deferrals/contributions have been made in 2025. Would that notice work? Or does it need to include language regarding the replacement with the SH 401k?

If the SIMPLE IRA term date is 6/30/25, the SH 401k has to start 7/1/25.  There are exceptions to SH plans being in place for a full year, this is one of them.  

You only get SIMPLE ER contributions / SH for the time you were in the respective plan

To terminate a SIMPLE at year end, you need to notify employees by November 2.  You need a 30 day notice for a mid year termination

12 hours ago, Bill Presson said:

Can you fix your dates and ask again?

Fixed - thank you.

1 hour ago, RatherBeGolfing said:

If the SIMPLE IRA term date is 6/30/25, the SH 401k has to start 7/1/25.  There are exceptions to SH plans being in place for a full year, this is one of them.  

You only get SIMPLE ER contributions / SH for the time you were in the respective plan

To terminate a SIMPLE at year end, you need to notify employees by November 2.  You need a 30 day notice for a mid year termination

Got it - Plan effective date starts the day after Simple termination date, not just the salary deferrals. 

Do you think a simple email of 'Your Simple IRA is terminating effective ____' would suffice as a notice of termination? The sponsor says he gave notice to participants in December of last year. Would an email to the provider notifying them of the termination also be required back in December?