If you’d like to move to a 401(k) for 2018, you must notify employees by 11/2
As your business or that of your clients has grown, you may be thinking it’s time to upgrade your retirement plan from a SIMPLE-IRA to a 401(k) Plan. The issue is that you can’t switch mid-year as IRS rules don’t allow for it. So, if you’re certain that you’d like to move to a 401(k) for 2018, you’ll need to notify all SIMPLE-IRA participants by November 2nd. Here’s a link to the IRS site showing how to terminate a SIMPLE IRA.
If you’d like a SAMPLE termination notice to send to your employees, we have one here on our website here.
You can work with your financial professional to determine the appropriate 401(k) Plan design & provider before year-end to maintain continuity without the constraint of an IRS deadline. Be aware, if you’d like it to be a “safe-harbor” plan similar to the SIMPLE-IRA, that does have a December 1st notice date to employees.
As always, if you have questions on this or need more, please contact your Odyssey consultant.