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Qualified Replacement Plan


Lou S.

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Can an existing plan of the Plan Sponsor be a qualified replacement plan?

Small DB plan with some excess assets above 415 limit, can they transfer it to an existing profit sharing or 401(k) that already covers all of the DB participants and allocate the excess or do they need to actually establish a new PS plan to accomplish this?

Excess assets can easily be allocated in 1 year.

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From IRC 4980(d):

2) Qualified replacement plan

For purposes of this subsection, the term “qualified replacement plan” means a qualified plan established or maintained by the employer in connection with a qualified plan termination (hereinafter referred to as the “replacement plan”) with respect to which the following requirements are met....

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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