Comparable Plan

[PMC]

Reg. 1.401-6 deals with the termination of a qualified plan. Para. (B) defines a termination and states a plan is not considered terminated merely because an employer consolidates or replaces that plan with a comparable plan. 1.381©(11) describes what constitutes a comparable plan.

Seems like terminating a MPP to start a Profit Sharing plan (k) would be O.K since they wouldn't be "comparable."

But what about an employer who currently has a Profit Sharing Plan ('ER $ only) and wants to terminate it, distribute assets to employees and then start a 401(k? Put the logic of this aside.

The 401(k) would seem to be a comparable plan. Would the employer be making an impermissible distribution of those PS $ because the plan wouldn't be considered terminated? Is there any length of time they would have to wait before starting the 401(k), similar to the 401(k) rule for distributing deferrals and starting a successor plan?

[IRC401]

The plan can be amended to permit employees to withdraw their vested interests. If the employer wants to force distributions, he needs to deal with 411(a)(11).

[PMC]

I guess my question is, can this employer terminate the PSP, distribute the assets to participants and then start a new 401(k) plan? Or does 1.401-6 mean that, if the 401(k) is considered a "comparable" plan, the PSP really can't be considered terminated and therefore no distribution of assets should ahve occurred (disregard any other satisfaction of a distributable event for this argument).