Conversion of MP Plan to Cross-Tested PS Plan

[Guest merlin]

I have a takeover client that currently sponsors a 20% mp plan. The allocation is prorata on compensation. The plan document is a standardized prototype which requires an allocation to any participant credited with 501 hours.As part of the GUST restatement I would like to recommend a change to a ps plan with a tiered or age weighted allocation, but what must be guaranteed to the current participants? Am I stuck with a comp/comp allocation for all of 2002? Or can I allocate comp/comp on pay through the date of adoption,and tiered thereafter? Are there any other alternatives anyone can think of?Thank you.

[Tom Poje]

maybe if you are Merlin the Magician you can get by....

you indicated the current plan provides a cintribution after 501 hours.

It is now 4/11. lets see, that is 101 days

101/7 = 14 weeks

at 40 hours a week you are over 500 hours.

you are going to have to provide some type of benefit under that plan.

I think you can cease that benefit as of some date this year, and then put in a profit sharing, throw in a ps contribution and cross test on an aggregated basis.