Keogh into 401(k)

[Guest dhoefer]

For a sole proprietor who wants to discontinue his Keogh Plan and start a 401(k) Plan, are there any restrictions to rolling the Keogh IRA assets into the 401(k) plan once it is established?

Specifically, does the Keogh have to be officially terminated? Or can the 401(k) plan be set up and then once established, simply complete an IRA rollover into the plan?

Thanks.

[Appleby]

Is it a Keogh or an IRA?

Remember that a Keogh is just a qualified plan established and maintained for a self-employed individual. The Keogh could be a 401(k) plan or any other qualified plan.

[Guest dhoefer]

It is a Keogh Plan, not an IRA

[wmyer]

Your Keogh (profit-sharing plan, right?) would generally just be amended to add a 401(k) feature. It would not generally be terminated.

[Bill Berke]

I agree with W Myer that you could amend the current document and add a 401(k) feature. However, I suspect that you are dealing with a prototype document, which means, as a practical matter, you are likely going to have to amend and restate the plan in its entirety - perhaps using (substituting in) the current Keogh prototype sponsor's 401(k) prototype document. This should not be any big deal. Just crossing the t's and dotting the i's properly. And you don't have to stay with the current document provider, but it would probably be easier to stay, especially if the document sponsor also holds Keogh assets or has sold investments to the Keogh plan.