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401(k) safe harbor plan terminated mid-year, is free pass on ADP and A


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- 401(k) safe harbor plan, 1/1 - 12/31 plan year

- Company sold 6/02, plan terminated

- Notice of elimination of s.h. 3% ER contribution provided timely

My ERISA outline talks about s.h. plans and the reqr for a 12 month plan year, and mid-year elimination of the s.h. contribution. It does not specifically address a plan termination.

So, in this scenario, can we still take an automatic pass on the ADP/ACP tests?

Thanks. Maverick

p.s. Of course, the ADP test fails miserably, and most of the people have already been paid out.

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  • 15 years later...

If that 6/30 sale of the business was an asset sale, would that not qualify as "the plan’s termination is in connection with certain business transactions described in Code section 410(b)(6)(C) (e.g., change in employer’s related group)?

Having braved the blizzard, I take a moment to contemplate the meaning of life. Should I really be riding in such cold? Why are my goggles covered with a thin layer of ice? Will this effect coverage testing?


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