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SIMPLE IRA Plan FAQs - Terminating a SIMPLE IRA Plan

When can I terminate my SIMPLE IRA plan?

Other than initial establishment, you must maintain your SIMPLE IRA plan on a whole-calendar-year basis. Once started, you must continue your SIMPLE IRA plan for the entire calendar year, funding all contributions promised in the employee notice. You may terminate your SIMPLE IRA plan prospectively, beginning with the next calendar year, after you’ve informed your employees that there will be no SIMPLE IRA plan for the upcoming year.

Example: In 2013 ABC Company decides to terminate its SIMPLE IRA plan as soon as possible. ABC must inform its employees within a reasonable time before the 60-day election period ending on December 31, 2013, that there will be no SIMPLE IRA plan for 2014. For 2014, ABC may establish and maintain another kind of qualified plan for its employees. If this other qualified plan is not operative in 2015, ABC may re-establish a SIMPLE IRA plan for 2015.

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Page Last Reviewed or Updated: 06-Jan-2014