MPP Merger/Termination

[Guest Tara Curran]

We have read many of the messages from the message board regarding whether an MPP contribution must be made in year of plan termination/merger. However, we are not sure we fully agree with the analysis of a standardize plan. Our standardized prototype says if you terminate, you must work 500 hours to receive a contribution. This would mean then that someone who received a contribution last year, is eligible in the current year, employed on the last day of the current year and worked only 300 hours would receive a current year contribution.

Therefore, under our standardized plan, if we terminate the MPP after the first of the year, we feel that an MPP contribution will need to be made based on compensation up until the termination date even though participants haven't worked 500 hours.

Is this correct?

Report this post to a moderator |

01-07-2002 12:36 PM

[Archimage]

I would think that is true. If your adoption agreement says that you have to work 0 hours to get a contribution, then you have to give them a contribution. Double check your document to make sure. What document are you using?

[Guest Tara Curran]

Our prototype document is from Sunguard Corbel.

[Archimage]

I found an old Corbel document and I see what you are talking about. I would be inclined to interpret as you did. The document I use allows us to put a max of 500 hours for allocation accruals. If you did not amend the doc to have a 0% contribution before the plan year, I would agree with you. Anyone else have any additional thoughts?

[KJohnson]

I obviously don't have the document in front of me, but if the condition for allocation is either termination when you have over 500 Hours of Service or being employed on the last day fo the Plan Year regardless of the number of Hours of Service then it would seem that you would be o.k. if you terminated prior to anyone accruing 500 hours because nobody has "earned" the allocation for the year.