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Wanted to make sure this course of action was ok...

A partnership consisting of four partners has a 401(k) plan. The partnership is terminating and becoming two new, completely separate partnerships (each with two of the four previous partners).

They would like to terminate the existing plan and each new partnership wants to create a new plan, crediting prior service with the old partnership.

To add to this scenario, it is determined that the plan is top heavy for 2003. If the plan terminates mid-year is a top heavy contribution required? (This issue seems unclear in the reference material that we have.)

Would be interested in any opinions on the top heavy issue and any successor plan issues.

Thanks.

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