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March 3, 2009

When can an employer terminate a SIMPLE IRA plan?


When can an employer terminate a SIMPLE IRA plan?

Question When can an employer terminate a SIMPLE IRA plan?


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 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.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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