Our firm does not have alot of exposure to SIMPLE plans or the business that comes in. I apologize if these questions are too basic but I appreciate the assistance!

1. If a client has a SIMPLE 401(k) for 2002 and would like to have a traditional 401(k) for 2003 what can be done with the SIMPLE? Must the plan terminate and we establish a brand new 401(k) plan for the client for 2003? In affect, the Plan Number for the SIMPLE 401(k) would be 001 and the traditional would be 002 on the 5500? A new effective date? And are the contributions able to "rollover" or is the new plan considered a successor plan?

2. Is it possible to amend the SIMPLE 401(k) into a traditional 401(k) and leave the plan number, effective date, and assets the same? Are the SIMPLE provisions considered protected benefits, thus the plan would have to maintain the 100% vesting or is that vesting only for the SIMPLE assets and the client may choose a new schedule?

Any help is appreciated! Thank you!

I did not realize that there were ANY SIMPLE 401(k)'s out there....

My question is why?

If the sponsor likes the concept of a SIMPLE plan, why not just go with the SIMPLE-IRA?

What do you gain over the SIMPLE_IRA and tradition or Safe Harbor 401(K) in a SIMPLE-401(k)?

By the way, to answer your question - I wuold go with answer number two.

Continue the same plan, just convert (amend) it to a non SIMPLE-401(k). You could keep track of the employer contributions prior to the conversion in a seperate bucket, much you you do in a Safe Harbor Plan.

I agree with ActuarySmith. Amending a SIMPLE 401(k) mid-year (e.g. to a traditional 401(k) for the current year), however, would be problematical.