May an employer who currently maintains a Simple IRA for its employees convert to a Safe Harbor 401(k) Plan as of January 1, 2010?
Rev. 10/05/07, E-mail Alert 2007-13, Rev. 05/07/10

The Simple IRA must be a calendar year plan and must be the exclusive plan for the year and must be continued until the end of 2009. The safe harbor 401(k) may be established as of January 1, 2010 provided the Simple IRA is discontinued as of December 31, 2009, and provided the employees are informed of the termination of the Simple IRA and the beginning of the safe harbor 401(k). Of course, the safe harbor notice must also be provided by January 1, 2010. Simple IRA contributions may not be made for 2010, or subsequent years while the 401(k) plan is in existence, safe harbor or not.