SIMPLE 401(k) Plan
Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions
March 3, 2009
When can an employer terminate a SIMPLE IRA plan?
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When can an employer terminate a SIMPLE IRA plan?
Question
When can an employer terminate a SIMPLE IRA plan?
Answer
Except for the first year[1], when a SIMPLE IRA can be established in the middle of the year, a SIMPLE IRA must be maintained for the entire calendar year. As such, a SIMPLE IRA cannot be terminated mid-year. Instead, an employer who wants to terminate a SIMPLE IRA must terminate the plan ‘effective as of ‘January 1 of the following year.
Question Answered by http://www.applebyconsultinginc.com/ Denise Appleby
[1] A SIMPLE IRA must be established by October 1. An exception applies to employers that come into existence after October 1. For these employers, the plan must be established as soon as administratively feasible.
