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0% Money Purchase For Rollovers


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No problem Austin. Fiduciary... The problem with attempting to do this in a profit sharing plan is that qualified plans must receive """substantial and recurring contributions'''' in order to be valid. The Money Purchase Plan is subject to a fixed formula (even zero), the would appear to preempt the substantial and recurring requirement.

Good Luck!


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I know a few attorneys that object to a 0% MP plan. They always set up a 0.5% MP plan.

They fear that Government will take the position this isn't a real plan as the purpose wasn't to provide benefits but as you say simply allow for money that you couldn't take a loan from to now take a loan.

They also questioned if 0% is really a benefit level.

I never have heard of a 0% MP plan blowing up but I know lawyers that don't like them.

I am not sure why it matters if you don't have substantial and recurring contributions. I thought the only effect was you had to vest people. If 100% of the money is rollover money isn't already vested? It has been a long time since I had a substantial and recurring contribution problem so I could be forgetting something.

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^^ I've seen MP plans go from, say, 3% to 0%. I see it like freezing the plan. However, I've never seen one at 0% from effective date.

Maybe they could set up 1/2%, exclude HCEs, for the first year and amend it to zero the next.


Two wrongs don't make a right, but three rights make a left.

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