Robert Powell, CFP®
To replace a SIMPLE IRA with a 401(k) plan in 2021, you must act fast. Under IRS rules, a SIMPLE IRA must be the sole retirement plan in effect during the year and the deadlines for terminating a SIMPLE IRA in 2020 are right around the corner. If you miss either deadline, you will be stuck with your SIMPLE IRA for another year and the soonest you’ll be able to start a new 401(k) plan will be 2022.
December 31, 2020: you must terminate your SIMPLE IRA on this date – not before, and not after – for 2020.
November 2, 2020: to terminate a SIMPLE IRA, you must first notify plan participants about the termination 60 days in advance. If you miss this deadline, you won’t be able to terminate your plan on December 31.
For further termination instructions, contact your SIMPLE IRA provider.
Source: Employee Fiduciary