Important Deadline Approaching
Contractors are all too familiar with deadlines. But an important deadline is fast approaching that many contractors may not be aware of. To discontinue using a SIMPLE plan in 2011, contractors must notify both the financial institution handling the plan and their employees of their intent to discontinue making contributions to SIMPLE plan by November 1, 2010.
Many contractors start out using SIMPLE plans because they’re relatively easy to set up. But they usually discover fairly quickly that SIMPLE plans lack the flexibility prevailing wage contractors need to effectively accommodate their retirement plan needs.
We have a summary of the reasons SIMPLE plans don’t work for prevailing wage contractors on our website. If you intend to switch from a SIMPLE plan to a different type of retirement plan more appropriate for contractors doing prevailing wage work in 2011, it’s important to provide written notification to your employees and the financial institution handling your plan by November 1, 2010. It is not required that you notify the IRS.