Mid-Year SIMPLE Plan Conversion (1)

Mid-Year

SIMPLE Plan Conversion

The ability to transition from a SIMPLE IRA to a Safe Harbor 401(k) mid-year isn’t brand new, but it remains one of the most strategic opportunities for plan sponsors today.

This flexibility allows business owners to upgrade their retirement plan offerings without waiting for year-end deadlines, and thanks to penalty-free rollovers, the process is smoother and more cost‑effective than ever.

Here’s what you need to know about the legislation and how to transition from a SIMPLE IRA to a 401(k) mid-year:

Contribution Limit	Business Owners can save an extra $59,000 in the first full year of the Safe Harbor 401(k) plan compared to a SIMPLE IRA.
Deferrals	Deferral limit is pro-rated by number of days each plan is sponsored in the first year.
Penalty Free Rollovers	Distributions for the SIMPLE plan can be rolled over immediately without penalty and taxes.
Notices	30-day notice that the SIMPLE plan is terminating and the required Safe Harbor notice.
Deadlines	The 401(k) plan should start the same day the SIMPLE plan is terminated.
Tax Credits	Eligibility to receive an auto-enrollment credit and employer contribution credit.
Plan Design	The ability to add Profit-Sharing mid-year and a Cash Balance Plan in future years.

Key Takeaway: Business Owners who have outgrown their SIMPLE plan no longer have to wait until the end of the year to experience the benefits and accelerated savings of a Safe Harbor 401(k) plan. Immediate rollover of distributions, additional tax credits, and flexibility in plan design make a Safe Harbor 401(k) plan a great choice for long-term retirement plan growth.

Expand service offerings and strengthen client relationships with Safe Harbor 401(k) Plans. Learn more about them HERE.

Contact our Regional Vice President to learn more.

25 Nov 2025

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Trinity Pension Consultants