We have a client who would like to terminate their 401(k) plan and establish either a simple IRA or simple 401(k) this year. Is there any waiting rule (successor plan rule)? Do the participant funds have to be transferred to the Simple?

The simple IRA plan is not regarded as a successor plan for the 1 year wait; however, there is a rule you can't contribute to a 401k and a simple IRA plan in the same year. So to stop a 401k now means you can't do a simple until 1/1/05