Amend a SIMPLE IRA plan

ARTICLE TAKEAWAYS

  • Examples of when a SIMPLE IRA plan may need to be amended
  • The steps required to amend a SIMPLE IRA plan

For employers with existing SIMPLE IRA plans, changes to the plan may require the plan to be amended, prior to the enrollment period for the following calendar year.

The SIMPLE IRA plan must be amended if any of the following changes:

  • Eligibility requirements
  • Adding/removing the Roth salary deferral option
  • Type of plan document used
     

The plan sponsor is responsible for preparing and distributing disclosure documents to all eligible employees prior to the enrollment period, November 2 through December 31 of the current year.

Please note the following:

  • When a SIMPLE IRA plan is amended, it will be effective January 1 of the following year
  • The Internal Revenue Service requires the current SIMPLE IRA plan to continue to operate as is for the current calendar year

How to amend an existing SIMPLE IRA plan

Step 1

The plan sponsor must:

  1. Amend their plan by completing the SIMPLE IRA Adoption Agreement located in the SIMPLE IRA Plan Sponsor Guide. Complete all relevant sections, not just those you are updating. The changes to the SIMPLE IRA plan will be effective January 1 of the following year. 
  2. Keep a copy of the adoption agreement for their records
  3. Return the completed forms to Capital Group. Copies are acceptable.

Step 2

The plan sponsor must communicate the plan changes to all eligible employees prior to the November 2 start of the enrollment period by providing the following forms:
 
  1. Notification to Eligible Employees1,2
  2. Summary Description for the SIMPLE IRA Plan1,2
  3. SIMPLE IRA Salary Deferral Election2


If the plan is amended to add Roth employee salary deferral contributions, participants electing to make a Roth salary deferral contribution for the first time must complete a new SIMPLE IRA Application, which is found in the SIMPLE IRA Employee Guide. Once received, Capital Group will establish a Capital Bank and Trust Company (CB&T) Roth SIMPLE IRA to receive any Roth deferrals.

1 The plan sponsor must complete before distributing.

2 Capital Group will send the plan sponsor these documents prior to November 2. They can also be found in the SIMPLE IRA Plan Sponsor Guide.

Step 3

  1. Collect the completed Salary Deferral Election forms from employees and SIMPLE IRA Applications from new participants and existing participants establishing a Roth SIMPLE IRA
  2. Mail the following to Capital Group:
    • Completed SIMPLE IRA Application(s) for new participants establishing an account and/or existing participants establishing a Roth SIMPLE IRA
    • If the company is paying the account setup fee(s), include a check for $10 for each new participant establishing an account

Note: For SIMPLE IRA plans that offer Roth salary deferral contributions, a participant’s CB&T SIMPLE IRA and CB&T Roth SIMPLE IRA are considered the same IRA type. Only one setup fee and one annual fee are charged for the participant.

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