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Replacement/successor plans


pbarrett
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We have a client who established a 401k plan 1/1/98. He had an existing ps plan at the time. January 31, 1998 he terminated the ps plan. The distributions still have not been made from the ps plan but will be soon. Are there any problems here tied to successor plan rules?

Any help would be appreciated.

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Guest LBBarr

You may want to look at Treas. Reg. 1.401(k)-1 (d)(3) that provides any defined contribution plan e.g., a profit sharing plan constitutes a successor plan.

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If the distributions are being made from the p/s plan and do not include 401(k) monies, then distribution is permitted. The successor plan rules only apply to distributions of 401(k) monies (not p/s monies) due to plan termination while a successor plan exists.

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Guest LBBarr

My apologies, I thought there was a 401(k) element to the terminating plan, if there is not I would agree that there should be no successor plan issue.

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