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Terminating a SEP or SIMPLE IRA retirement plan
If the time comes that a SEP or SIMPLE IRA plan no longer suits the purposes of your business, consult with your financial institution to determine if another type of retirement plan (or, perhaps, no plan at all) might better suit your needs.
To terminate a SEP or SIMPLE IRA plan, notify the financial institution that you chose to handle the plan that you will no longer be making contributions and that you want to terminate the contract or agreement. When terminating a SEP plan, it is a good idea, to notify your employees that the plan has been discontinued. However, when terminating a SIMPLE IRA plan, you must notify your employees that the plan is being discontinued. A SIMPLE IRA plan can only be terminated prospectively, as of the beginning of the next calendar year. Make sure to document in your files the notification and termination steps you’ve taken.
You do not need to give any notice to the IRS that your SEP or SIMPLE IRA plan has been terminated.
Terminating your qualified plan
Although qualified plans (such as a 401(k) or defined benefit plan) must be established with the intention of being continued indefinitely, you (as an employer) may terminate your plan when it no longer suits your business needs. For example, you may want to establish another type of retirement plan.
Typically, the process of terminating a qualified plan includes amending the plan document, determining the benefit for each participant, distributing all assets and filing a final Form 5500. You must also notify your employees that the plan will be discontinued. You may (but are not required to) file a Form 5310, Application for Determination for Terminating Plan, to ask the IRS for a determination of the plan's qualification status at the time of the termination. Check with your financial institution or a retirement plan professional to see what further action is necessary to terminate your plan.