Deferrals to (now terminated) Simple IRA not deposited

The employer withheld deferrals for a small handful of participants and failed to deposit them in 2019 when the employer had a Simple IRA for it's employees. The Simple IRA was terminated at the end of 2019. The employer began sponsoring a 401(k) plan in late 2020. The employer discovered the deferrals withheld for the Simple IRA were never deposited and wishes to correct the error.

What is the proper correction for deferrals withheld under a plan that has since been terminated? Can the deferrals withheld under the Simple IRA and their associated lost earnings be deposited to the 401(k) the employer now sponsors?

Sorry if this is a simple one. I searched a bit through questions and didn't find a similar problem addressed.

The deferrals need to go to the SIMPLE. The 401(k) didn't exist when they were withheld.

Were the Simple still in existence, we would simply do that. As mentioned, the Simple was terminated in 2019.

I understand it was terminated. Were all of the accounts distributed as well? That's possible but could be they are still in place. If not, I would recommend re-opening them or opening new ones. It's gotta be fixed.

1 hour ago, DSev said:

Can the deferrals withheld under the Simple IRA and their associated lost earnings be deposited to the 401(k) the employer now sponsors?

As Bill Presson indicated above, the answer is no.

1 hour ago, DSev said:

What is the proper correction for deferrals withheld under a plan that has since been terminated?

As Bill Presson also indicates above, you are going to need to re-open the effected participant's accounts for purposes of making the correction. Put them in the position they would have otherwise been absent the error (including interest). 

Do not forget that the late contribution of withheld amounts is a prohibited transaction. Look at doing a VFCP filing with the DOL, which if properly accepted, will get the plan sponsor out of the 15% excise tax on the PT .