To assist employers in making these elections and documenting the elections for the plan’s records, Ascensus has created a new form, Additional SECURE and SECURE 2.0 Plan Provisions Employer Election Form, that can be used to make and document these elections. The form is designed to capture how the plan operates with respect to all new provisions (both mandatory and optional) under the SECURE and SECURE 2.0 Act. These provisions include increased deferral limits, additional nonelective contributions, optional Roth SIMPLE elective deferrals and optional Roth SIMPLE matching or nonelective contributions. In addition, Ascensus has updated the Participation Notice and Summary Description and Salary Reduction Agreement forms to also reflect these new provisions, giving the employer the ability to indicate whether these provisions apply under the plan and giving the employees the updated information so that they may make informed decisions on how much to defer into the plan. Keep in mind that the IRS has indicated that SIMPLE IRA plans will not have to be amended for these new SECURE and SECURE 2.0 provisions until Dec. 31, 2026, at the earliest. It is important for employers to document their decisions on these new provisions and how they operated the plan so that the plan may be amended properly at that time. We have a client that has a SIMPLE plan with us who is terminating the plan and replacing it with a 401(k) plan. He is asking us for a termination letter to give to his employees. Is this something that our financial organization should provide to him? Even though it is not the financial organization’s responsibility to provide a SIMPLE IRA termination notice for an employer, Ascensus has created a Mid‑Year SIMPLE IRA Plan Termination Notice that may be provided to employers to use for this purpose. As you know, an employer may now terminate a SIMPLE IRA plan at any time during the year as long as the employer is replacing the SIMPLE IRA plan with a safe-harbor 401(k) plan. The employer must give employees at least a 30-day notice that the SIMPLE IRA plan is terminating, and the notice must include specific information for it to be valid. It is up to the employer that is terminating the SIMPLE IRA plan to provide the termination notice to employees. The Ascensus termination notice includes all information required to be given about the terminating SIMPLE IRA plan. The employer must also provide a notice regarding the new safe harbor 401(k) plan and should be able to obtain that notice from the 401(k) document provider. Are new IRS model documents available yet? As of this writing, the IRS had not yet released updated model Roth IRA documents. Additional guidance is needed to determine whether Roth SIMPLE contributions may be made to an existing Roth IRA or if they must be contributed to a separate Roth IRA. In addition, it is not known whether the IRS will create new employee-level Roth SIMPLE IRA documents. The 2023 Instructions for Form 8606, Nondeductible IRAs, reference using the form to report “distributions from Roth, Roth SEP or Roth SIMPLE IRAs,” which may indicate that the IRS is intending to release new documents. It is up to your financial organization to determine whether you are ready to administer Roth SIMPLE contributions at this time. 11 Colorado Banker
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