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"partially" dissolving a plan


Brian Gallagher

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we currently record keep a plan that has 401k, some match and safe harbor, and profit sharing.

the plan is leaving us to go with a new provider that only does p/s plans. the pa wants to liquidate the 401k, match and safe harbor as a plan termination, while retaining the p/s in the plan.

can she do that? or does she have to terminate the whole plan and start a new one with just p/s? and in that scenario, i would think the participants would have the option to roll the money into the new plan or do with it what they will--it could not be mandatory.

any thoughts would be appreciated.

:)

Remember: two wrongs don't make a right, but three rights make a left.

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what you are describing is not a plan termination, it's in-service disttributions. If the plan administrator only does pst plans (which is pretty light when it comes to tpas these days) she/he could freeze the 401k accounts and keep the current plan intact. There is no point in terminating the plan just to maintain profit sharing accounts in a new plan. This company should seriously rethink moving to an administrator that is so narrow in its methodology and possibly technology that they cannot maintain more than employer contributions in their system. Let me guess; the new administrator either dosen't charge as much for their work or they are a relative.

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