401(k) safe harbor plan terminated mid-year, is free pass on ADP and A

[maverick]

Situation:

- 401(k) safe harbor plan, 1/1 - 12/31 plan year

- Company sold 6/02, plan terminated

- Notice of elimination of s.h. 3% ER contribution provided timely

My ERISA outline talks about s.h. plans and the reqr for a 12 month plan year, and mid-year elimination of the s.h. contribution. It does not specifically address a plan termination.

So, in this scenario, can we still take an automatic pass on the ADP/ACP tests?

Thanks. Maverick

p.s. Of course, the ADP test fails miserably, and most of the people have already been paid out.

[jaemmons]

If you provided a notice eliminating the 3% NE for the current year, then you don't have a safe harbored plan and must test with current ADP %'s.

[Mike Preston]

Those that have been paid out need to be told that a portion of the monies they received are not eligible for rollover.

[Below Ground]

If that 6/30 sale of the business was an asset sale, would that not qualify as "the plan’s termination is in connection with certain business transactions described in Code section 410(b)(6)(C) (e.g., change in employer’s related group)?