Skip to main content

Mid-Year SIMPLE Plan Conversion


SIMPLE Plan Conversion

The retirement plan landscape has undergone a notable transformation with the implementation of the SECURE Act  2.0 Legislation.

One noteworthy change allows for the termination of a SIMPLE plan and a transition into a Safe Harbor 401(k) plan mid-year.

Here’s what you need to know about the new legislation:


Contribution Limit

$57,000 more in savings starting in the first full year of the Safe Harbor 401(k) plan.


Deferral limit is pro-rated by number of days each plan is sponsored in the first year.


Distributions for the SIMPLE plan can be rolled over immediately without penalty and taxes.


30-day notice that the SIMPLE plan is terminating and the required Safe Harbor notice.


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 superior choice for long-term retirement plan growth.

Expand service offerings and strengthen client relationships with Safe Harbor 401(k) Plans.

Contact our Regional Vice President to learn more.

About the author

Heather Craigg