Plan Termination-Final Profit Sharing Contribution

[Guest wolfpack]

Have a client terminating their plan effective 9/30(this is the amendment effective date not when all assets distributed). They would like to make a final profit sharing contribution but cannot make the contribution until October. If they prepare a resolution prior to the termination effective date to make to contribute a specific dollar amount would it matter that the deposit is after the plan term date? I would appreciate any help.

[Ervin Barham]

Will the employer still be in existence after September (i.e.- merger/stock sale)?

If so, as long as the resolution is passed by September 30, you should be able to make the contribution even though it is after the plan termination.

[Guest Meg]

Topic: Company changing retirement plans

I work for a non-profit agency that currently has a 401(a) retirement plan, and employee owned 403(B) accounts.

We intend to terminate the 401(a) plan and replace it with a 401(k) with a company match to make the plan more attractive and increase plan participation.

The plan year for the 401(a) runs 07/01 to 06/30. We will be making the annual plan contribution after the 06/30/99 valuation. After that, we'd like to introduce the new 401(k).

I'd appreciate it if anyone could offer some advice on when we actually (legally versus "heads up") have to tell the employees that we are changing plans and any pitfalls to watch out for.

Thanks very much!