My boss just asked me to post this here:
We have a new client that has an existing SIMPLE-IRA plan. The client provided the needed notification prior to the 60 day deadline. Subsequent to that notification, they decided to implement a 401k plan. The financial institution told them they have to wait for 2 1/2 months before they can do this. They did not provide a cite and I couldn't locate anything in Sal's book [The ERISA Outline Book] that indicates this limitation exists.
Here's what they want to do:
1 Stop contributions to the SIMPLE-IRA effective 12/31/05.
2. Start a new 401k plan effective 1/1/06.
Can this be done?
Any thoughts? Thanks for the help!