I work with a small company who currently has a SIMPLE IRA plan. They are doing the match 3% option. The company now would like to stop contributing so we discussed just making the SIMPLE IRA’s Traditional IRA’s for the employees and keep having them payroll deducted. Each employee has had their SIMPLE IRA for more than 2 years. I have 2 questions…

First, can the employees contribute (and deduct) to Trad IRA’s in this calender year even though they contributed part of the year to a SIMPLE IRA plan? I was thinking they could as long as they were below their respective IRA income limits.

Second, can these payroll deducted IRA’s be withheld pre-tax from their respective paychecks or does it need to be settled on their individual 1040’s at tax time? If they can be withheld pre-tax what code goes in what box on their w-2’s?
Thanks for any insight.