SIMPLE plan

Questions regarding SIMPLE Plans:

SIMPLE plan established 2016

Eligible employee’s enroll in the plan between 11/2 – 12/31 for the upcoming year (as long as they meet the compensation/year requirements)?

Can an employee enter the plan anytime throughout the year?

Salary election changes: only between 11/2 – 12/31 and if the plan allows modifications which are stated in 2b of the 5304-Simple?

Employee can terminate salary reduction at any time?



Yes, eligible employees must enroll during the annual election period unless they first become eligible after that period ends.
Employee cannot enter the plan other than at the annual enrollment period unless they first become eligible after the annual enrollment, or as specified in the 5304 or 5305.
Employee can terminate salary reductions anytime, but may also be allowed to modify their % contribution at frequencies specified in the 5304 or 5305 Article II, 2b.



Question 1) you say that eligible employees must enroll during the annual electoin perios of 11/2 – 12/31 UNLESS they first become eligible after that period ends.  I guess I’m not understanding what you mean when you say “Unless they first become eligible after that period ends, can you explain this (what would be an example of this)?the plan requirements are 5k over 1 prior year, 5k current year.Compensation 2020  3kCompensation 2021 50kI would assume this employee will be eligible 1/1/2022 if he is expected to have 5k or more in compensation?  



New plan or new employees have a 60-day enrollment period from the relevant date. 60 days prior to the effective date of a new plan other than 1/1. 60 days from the date of higher for new hires.
Note: The 60 day requirement is a minimum. Nothing prevents an employer/plan from being more lenient on that or other requirements.



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