401k terminating; starting a SIMPLE

An employer wants to terminate his 401k plan in 2019 and start a SIMPLE at the beginning of 2020.  Can the employee 401k accounts be rolled immediately into the SIMPLE or is there a 2 year wait?  If a 2 year wait, then if the owner and/or participants wanted to have their 401k money in the SIMPLE, they would have to park the money in an IRA, wait to years, then move it to the SIMPLE, does that sound acceptable?

Thank you

Santo Gold, there is a two-year wait. The two-year period starts for each employee on the date he or she first receives a contribution under the SIMPLE. So yes, they could park the money from the k plan in a rollover IRA, wait until 2 years after they each receive first contribution to the SIMPLE, and then roll from IRA to SIMPLE IRA.

It's a rule of convenience. 72(t)(6) imposes the higher, 25% early distribution penalty on amounts coming out of the SIMPLE during first two years of participation in SIMPLE. Of course the early distribution penalty for amounts coming out of a k plan and not rolled is only 10%. But to avoid having to require custodians to segregate rollovers to a SIMPLE IRA from new contributions in the SIMPLE IRA, they don't let you roll non-SIMPLE money to a SIMPLE for two years, just like you can't roll SIMPLE money to a non-simple for two years, since then, unless there was some tracing rule (which would be an admin "nightmare"), you could wash the money through the new, non-SIMPLE plan, take a quick distribution (most plans allow distributions of rollover accounts at any time), and avoid the 15% of the 25% penalty.