Converting a DC plan to a DB plan

[Blinky the 3-eyed Fish]

Does anyone see a problem with restating an existing calendar year MP plan into a DB plan effective back to 1/1/2003? There is a last day requirement for the MP contribution. Effectively, the existing MP dollars would be treated as a separate account within the plan and would not affect funding.

I am trying to avoid terminating the MP and all the work involved to save the client costs. That's all.

[AndyH]

I've never seen this done, but I don't know any prohibition on it. I'd think, however, that you'd need a pretty complex document to account for all the MP account balance features (assuming you have balances). Since it would not be a voluntary rollover, you'd have to watch for 411(d)(6) issues.

The document costs might outweigh the savings. How about transferring the money into a deferral only k plan instead?

[Blinky the 3-eyed Fish]

What about merging the MP plan into the DB plan? It would almost seem in that situation that the MP balance would be in the same situation as say a rollover from an outside plan or IRA and special plan language would not necessarily be needed. Whadya think?

[AndyH]

Blinky, I don't think so. A rollover is an elective, voluntary action that includes the knowing forfeiture of any protected rights or features that were held under the prior plan in favor of whatever provisions the new plan has. A merger, restatement, or transfer is an involuntary action that requires that all such rights and options that are protected under 411(d)(6) be preserved.

[Blinky the 3-eyed Fish]

But if I maintain the same options in the DB plan on when and in what form the benefits are payable (as I did when merging my MP and PS plans) then how does this not satisfy 411(d)(6)? It's just that this merger is between two different types of plans.

[AndyH]

I think that it does. I'm just saying it might be tough to find a DB document with the necessary MP provisions.

[Guest Ray Williams]

The Corbel DB Volume Submitter Checklist & document provide for the conversation of either a PS or MPP into a DB plan. The document contains all of the language necessary to maintain any needed MP characteristics.

I have never gone directly from a MPP to a DB, but we have done several where we merged a MPP into a PSP, then converted to a DB.